Financial Performance of Hindalco

“Financial Performance Analysis With Special Reference to
The Capital Structure of Hindalco Industries Limited”
CHAPTER I
INTRODUCTION
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1.1 INTRODUCTION
Finance refers to the management of flows of money through an organization. Finance is defined
as the provision of money at the time when it is required. Every enterprise, need finance to carry
on its operations and to achieve its target. Without adequate finance no enterprise can possibly
accomplish its objectives.
Finance is regarded as the lifeblood of a business enterprise. This is because in the modern money
oriented economy, finance is one of the basic foundations of all kinds of economic activities. It is
the master key, which provides access to the entire source for being employed in manufacturing
and merchandising activities. It has rightly been said that business needs money to more money.
However, it is also true that money begets more money, only when it is properly managed. Hence,
efficient management of every business enterprise is closely linked efficient management of its
finances.
In this study, an attempt has been made to conduct an analysis and interpretation of the financial
performance of the Hindalco Industries Limited with special reference to its capital structure for
the period from 2008-2009 to 2012-2013. The study includes an attempt to analyze the annual
report of Hindalco Industries Ltd. for evaluating its physical, financial and operating performance.
The researcher intends to cover the working capital management, financial management and
accounting policies and practices of the company. The methodology adopted in this study
includes ratio analysis, comparative balance sheets, cash flow statements, schedule of working
capital changes and trend analysis using secondary data. An industry leader in aluminium and
copper, Hindalco Indusries Limited, the metal flagship company of the Aditya Birla Group is the
world’s largest aluminium company and one of the biggest producers of primary aluminium in
Asia. Its copper smelter is the world’s largest custom smelter at a single location. Therefore, to
measure the profitability, identifying the trends and achievements and assessing the growth
potential of Hindalco Industries Ltd. will reveal its overall strength and competency. Hence, the
researcher intends to cover the financial an in-depth study of financial management system of the
company for the reference period the way in which the study is conducted and the interpretations
drawn gives room for real and practical experience of financial practices that guides the industry
and economy in general.
The test of success of a business enterprise is its ability to earn profit and continue its operation
and growth. Profit may be considered as an index of success. Financial planning results in the
formation of the financial plan. It is primarily a statement estimating the amount of capital and
determining its composition.
Financial analysis is the process of identifying the financial strength and weakness of the firm by
properly establishing relationship between the item of balance sheet and P/L account. According
to Kennedy and Memuilez, "The analysis and interpretation of financial statement are an attempt
to determine the significance and meaning of the financial statements data so that a forecast may
be made of the prospects for future earning capacity, ability to pay interest and debt maturities
and profitability of a sound dividend policy.
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1.2STATEMENT OF THE PROBLEM
The study entitled “Financial Performance Analysis With Special Reference to The Capital
Structure of Hindalco Industries Limited” is an attempt to analyze performance and
profitability of the company. Hindalco is operating in a highly competitive market and it is
important to know the pulse of the market to keep moving beyond the competitors.
1.3 OBJECTIVES OF THE STUDY
 The primary objective is to study the financial performance of the company.

 To obtain a true insight into financial position of the company
 To know he financial efficiency and weakness of the concern.
 To make comparative study of the financial statement of the different years.
 To draw a true picture of the financial operations of the company in terms of liquidity
 To analyze and interpret the various financial operations of the company in terms of the
profitability.
 To conduct a financial statement analyses of final accounts.
 To identify the areas of improvements, if any in the financial management practices of the
company.
 To make suggestions for developing strategies for improvement and growth of the
company.
1.4 SIGNIFICANCE OF THE STUDY
The study basically aims to find out the financial performance of the Hindalco Industries ltd.
Knowledge of the current financial position are vital for a company’s future of action. It includes
familiarizing with the various financial management policies standards, accounting system,
financial practices, internal control system and other salient features of the company. This study
also helps the public to evaluate the performance of the company in achieving its social
objectives.
1.5 SCOPE OF THE STUDY
The study basically aims to know about the financial performance of Hindalco. The scope of this
study is to make an effective analysis the performance of Hindalco. Management can use the
study for effective changes in their management practices .It also can be used effectively to
improve the quality of service and helps to penetrate the potential market. Financial analysis is
often undertaken for the purpose of comparing the financial performance of a company. Such
financial analysis should be conducted in order to determine the financial performance of a
company. Financial performance can be determined through the use of ratios, trend analysis
comparative income statement, and capital and even with more analysis. All these can be used to
study proper allocation of funds so that the company may yield a good return.
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1.6 RESEARCH METHODOLOGY
Methodology is defined as “the analysis of the principles of Methods rules and postulates employed
by a discipline”. Methodology refers to more than a simple set of methods; rather it refers to the
rational and the physiological assumptions that underline a particular study. Research is the process of
systematic in-depth study of research for only particular topic; subject or areas of investigation on
backed by collection, compilation and presentation of interpretation of relevant details of data. The
study is purely based on secondary data. Secondary data are from published and unpublished records
i.e., audited annual records and annual reports.
The study is mainly done using secondary data availed from the annual reports, publications, websites
and library of the company. Primary data related to the project was collected from the discussions,
unstructured interview and interactions with the senior employees and executives in the company
mainly from Finance Department.
1.7 REVIEW OF LITERATURE
CONCEPT OF FINANCIAL STATEMENTS
Financial statements, also called financial reports, refer to such statement as it contains financial
information of the company. They are overall general purpose entity statements as they report
financial position and operating result of an entire business at the end of accounting period. As a
matter of fact, these statements reflect the total of the summary of the books of account. They are used
as basis for decision by all those interested in the enterprise and the management may review the
company’s progress to date and decide upon the course of action to be taken in future on the basis of
information contained in the financial statement.
Financial statements
Meyer 2007 - Accounting plays a significant role within the concept of generating and communicating
wealth of companies. The relevance and reliability are the key characteristics of financial information
used in making valuation decisions. Relevant Information is such that “influences the economic
decisions of users by helping them. Evaluate past, present and future events”.
Holston 2005 - From the investors‟ perspective, relevant information is information which contributes
to their equity investment decisions. It must be noted that market value relevance as defined above is
only one of the possible interpretations of value relevant (Francis et al 2002). Accounting value
relevance is a concept that has admitted a number of definitions and measures.
Lev 1989 - asserted that relevance of accounting was characterized by the quality of the accounting
information. Gee-Jung 2009 - the accounting information has an ability to capture or summarize
information that affects equity value.
1.8 TOOLS OF FINANCIAL ANALYSIS
For the process of analyzing financial statements a large number of tools are available. The following
are the tools used in this project for the purpose of analyzing the financial performance of Hindalco
Industries Ltd.
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1. Ratio Analysis
2. Cash Flow Statement Analysis
3. Common Size Income Statement And Balance Sheet
4. Statement Of Changes In Working Capital
5. Trend Analysis etc.
1.9 PERIOD OF THE STUDY
The duration of the study was two months and the financial statement of five years is used
for analysis.
1.10 LIMITATIONS OF THE STUDY
The study suffers from the following limitations:-

The study is based on the last five years performance only.
Due to the inadequate time it is not possible to analyze all aspects relevant the study.
The study depends on secondary data.
This study is mainly depending on figures available in the Balance sheet and Profit
and Loss account. The actual position may be slightly different.
Personal bias of the researcher may influence the interpretation to a great extent.
Findings and suggestions of the study are purely based on the financial statements.
The limitation of ratio analysis is also form a part of this study.
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CHAPTER II
THEOREITICAL FRAMEWORK
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MEANING AND DEFINITION OF BUSINESS FINACE
The term business finance denotes finance of business activity. Business finance is an activity or
process, which is concerned with acquisition of funds, use of funds and distribution of profit by a
business firm.
Wheeler defines business finance as, “that business activity which is concerned with acquisition and
conservation of capital funds in meeting financial needs and overall objectives of a business
enterprise.
FINANCIAL STATEMENTS
Meaning
A financial statement is an organized collection o f data according to logical and consistent
accounting procedures. Its purpose is to convey and understanding of some financial aspects of a
business firm. It may show a position at a moment of time as in the case of a balance sheet, or may
reveal a series of activities over a given period ot time, as in the case of an Income Statement.
Financial statements are the outcome of summarizing process of accounting. In the words of John
N. Myer, “the financial statements provide a summary of the accounts of business enterprise, the
balance sheet reflecting the assets, liabilities and capital as on a certain date and the income
statement showing the results of operations during a certain period”.
Thus the term financial statements generally refer to two basic statements. (i) the income
statement (ii) the balance sheet, of course, a business may also prepare (iii) a statement of retained
earnings and (iv) a statement of changes in financial position in addition to above two statements.
CHARACTERISTICS OF IDEAL FINANCIAL STATEMENTS
The ideal financial statements should have the following characteristics:

Depict true financial position
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 Effective presentation
 Attractive
 Comparability
 Analytical Representation
 Easiness
 Brief
 Promptness
NATURE OF FINANCIAL STATEMENTS
The financial statements are prepared on the basis of recorded facts which ca be expressed in
monetary terms and are prepared for a particular period. The following points explain the nature of
financial statements.
Recorded facts
The term ‘recorded fact’ refers to the data taken out from the accounting records.
The records are maintained on the basis of actual cost data. As recorded facts are not
based on replacement costs, the financial statements do not show current financial
condition of the concern.
Accounting conventions
Certain accounting conventions are followed while preparing financial statements. The
use of accounting conventions makes financial statements comparable, simple and
realistic.
Postulates
The accountant makes certain assumptions while making accounting records. One of
these assumptions is that the enterprises are treated as a going concern.
Personal Judgments
Even though certain standard accounting conventions are followed in preparing financial
statements but still personal judgment of the accountant plays an important part. For example, in
applying the cost or market value whichever is less to inventory valuation the accountant will have
to use his judgment in computing the cost in a particular case.
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IMPORTANCE OF FINANCIAL STATEMENTS
 Management: The management is able to exercise cost control through financial

statements. The efficient and inefficient spots are bought to the notice of the
management. The management is able to decide the course of action to be adopted in
future.
 Creditors: The trade creditors are to be paid in a short span of time. This liability is
met out of current assets. The creditors will be interested in the short term solvency of
the concern. The current ratio and acid test ratio will enable the creditors to assets the
short term solvency position of the concern.
 Bankers: The banker is interested to see that the loan amount is secure and the
customer is also able to pay the interest regularly. The banker will analyze the Balance
Sheet and Profit and Loss account to determine the financial strength and profitability
of the concern.
 Others: Trade associations, stock exchange and public at large may also analyze the
financial statements to judge the financial position of different concerns.
LIMITATIONS OF FINANCIAL STATEMENTS

Financial statements suffer from the following limitations:-
Only interim reports
These statements do not give a final picture of the concern. The data given in these statements
is only approximate. The actual position can only be determined when the business is sold or
liquidated.
Do not give exact position
The final statement are expressed in monetary values, so they appear to give final and accurate
position. The value of fixed assets in the Balance sheet neither represents the value for which fixed
assets can be sold nor the account which will be required to replace these assets.
Historical costs
The financial statements are prepared on the basis of historical costs or original costs. The
values of assets decrease with the passage of time current price changes are not taken into account.
The statements are not prepared keeping in view the present economic conditions.
Impact of Non monetary factors ignored
These are certain factors, which have a bearing on the financial position and operating results of the
business. But they do not become a part of these statements because they can't be measured in
monetary terms.
No precision
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The precision of financial statement data is not possible because the statements deal with matters,
which can't be precisely stated. The data are recorded by conventional procedures followed over the
years.
TYPES OF FINANCIAL ANALYSIS
FIGURE 1
TOOLS OF FINANCIAL ANALYSIS
The analysis of financial statements consists of a study of relationships and trends to determine
whether or not the financial position of the concern and its operating efficiency have been
satisfactory. In the process of this analysis various tools or methods are used by the financial
analyst. The analytical tools generally available to an analyst for this purpose are as follows:
1. Comparative Financial and Operating Statements
2. Common-size Statements
3. Trend ratios
4. Average Analysis
5. Statement of changes in Working Capital
6. Funds Flow and Cash Flow Analysis
7. Ratio Analysis etc.
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1) Comparative balance sheet statement
Statements prepared in a form that reflects financial data of two or more periods are known as
comparative statements. Financial data becomes more meaningful when compared with
similar data for a previous period or a number of prior periods.
Comparative statements are of two types:
a) Comparative Balance Sheet

The comparative balance sheet analysis is the study of the trend of the same items, group of
items, and computed items in two or more balance sheets of the same business enterprise on
different dates. The changes in periodic balance sheet items reflect the conduct of the
business.
b) Comparative Income Statements

The Comparative Income Statements is a statement prepared to get an idea of the progress of
a business over a period of time. Comparative income statement has four columns. First two
columns give figures of various items for two years. Third and fourth columns are used to
show increase or decrease in figures, in absolute amounts and percentages respectively.
2) Common- Size Statements
The common size statements, balance sheet and income statement are shown in analytical
percentages. The figures are shown as percentage of total assets, total liabilities and total
sales. The total assets are taken as 100 and different assets are expressed as a percentage of the
total. Similarly, various liabilities are taken as part of total liabilities.
The two common size statements are :common size balance sheet and common size income
statement.
a) Common –size balance sheet

A statement in which balance sheet items are expressed as the ratio of each asset to total assets
and the ratio of each liability is expressed as the ratio of total liabilities is called common-size
balance sheet.
b) Common size income statement

The items in income statement can be shown as a percentage of sales to show the relation of
each item to sales. A significant relationship can be established between items of income
statement and volume of sales.
3) Trend analysis
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Trend signifies tendency. Therefore review and appraisal of tendency accounting variables is
called trend analysis. Trend ratios are also an important tool of horizontal financial analysis.
Under this technique of financial analysis the ratios of different items for various periods are
calculated and then a comparison is made.
3) Statement Of Changes In Working Capital
This statement is prepared to derive a fairly accurate summary of the events that affect the
amount of working capital. The amount of networking capital is determined by deducting the
total of current liabilities from the total of current assets. Hence, it is a rough statement which
may be prepared by using balance sheet data only.
4) Cash Flow Statement
Cash flow statement is an analytical statement prepared by the management accountant to

study the impact of the business transactions of a particular period on the most liquid form of
asset, namely, cash. The purpose of this statement is to highlight the major activities that
directly and indirectly impact cash flows and hence affect overall
5) Ratio Analysis
A ratio is a simple arithmetical expression of the relationship of one number to another. It may
be defined as the indicated quotient of two mathematical expressions. According to
Accountant's Handbook by Wixo Kell and Bedford, ratio, "is an expression of the relationship
between two numbers". A financial ratio is the quantitative relationship between two
accounting figures expressed mathematically”.
NATURE OF RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial statement. I am the

process of establishing and interpreting various ratios for helping in making certain decisions.
The following are the four steps involved in the ratio analysis.
 Selection of relevant data from the financial statements depending upon the objective of the
analysis.
 Calculation of appropriate ratio from the above data.
 Comparison of the calculated ratios with the ratio of the same firm in the past or the ratios
developed from projected financial statements, or the ratios of some other firms or the
comparison with ratios of the industry to which the firm belongs.
 Interpretation of the ratios.
ADVANTAGES OF RATIO ANALYSIS

 It provides a precise picture with the help of data:
It facilitates in explaining interrelation among various elements of financial statements.
 It facilitates intra-firm and inter-firm comparisons:
Meaningful analysis is possible through comparison. By means of reducing the mass of data into
a single number, a ratio helps in comparing risk-return relationship of firms of different sizes.
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 It assists in trend analysis:

As the mass of data relating to firms over a number of years are convertible in ratios, the trend in
ratios and variability over time may become more informative than the level of the ratio at a point
in time.
 It helps in measuring firm’s operational efficiency:

By means of measuring profitability, liquidity, capital structure etc.
 It helps projecting future:
Since ratios based on past activities reveal the structural relations, the management can project
future course of action on the basis of these past relations.
DISADVANTAGES OF RATIO ANALYSIS

 Ratios between unrelated items are meaningless:
A ratio by itself does not ensure the existence of economic relation between the numerator and
denominator.
 Problem of setting an ideal ratio:
Ratios alone cannot indicate optimal levels. Firm level ratios are to be compared with some ideal
ratios. But different decision makers need different standards.
 Impact of different accounting methods cannot be reflected through ratios:
When firms use different accounting methods, financial statements are not drawn on
comparable basis.
 Inability to reflect qualitative aspects:
Employee- management relation, customer preferences, self –developed goodwill are
qualitative aspects that cannot be reflected through ratios, since they are not reflected in financial
statements.
 Interpretations of ratios are not free from personal judgments of analysts:
Ratios are stated in numbers. These numbers are objective. But such numbers are interpreted by
analysts. Hence according to personal bias, same ratios may be interpreted differently by different
analysts.
Types of ratios
Some of the different types of ratios that can be calculated from data in the financial statements
and used to evaluate a business include:
 Liquidity ratios
 Solvency ratios
 Activity ratios
 Profitability ratios
1. Liquidity ratios
Liquidity ratios measure a business ability to cover its obligations, without having to borrow or
invest more money in the business... These ratios include:
 Current Ratio
 Liquid Ratio
 Absolute Liquid Ratio
Current Ratio
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Current ratio is the most common ratio for measuring liquidity. It represents the relation of
current assets to current liabilities. In a sound business a Current Ratio of 2:1 is considered as an
ideal one.
Current ratio = Current Assets / Current Liabilities
Quick Ratio
This ratio is sometimes known as “Acid Test Ratio”. It is the relation between quick assets to
quick liabilities. It is determined by dividing “quick assets” by current liabilities. The term quick
assets or liquid assets refers current assets which can be converted into cash immediately it
comprises all current assets except stock and prepaid expenses it is determined by dividing quick
assets by quick liabilities. An Acid Test Ratio of 1:1 is considered satisfactory as a firm can
easily meet all its current liabilities.
It is calculated by:
Quick ratio= Quick assets / Current Liabilities
Absolute Liquid Ratio
Absolute liquid assets include cash, bank, and marketable securities. This ratio Obtained by
dividing cash and bank and marketable securities by current liabilities.
Absolute liquid ratio = Cash + Marketable securities / Current Liabilities
2. Solvency Ratios
Many financial analyses are interested in the relative use of debt and equity in the firm. The term
‘solvency’ refers to the ability of a concern to meet its long-term obligation. Accordingly, long-
term solvency ratios indicate a firm’s ability to meet the fixed interest and costs and repayment
schedules associated with its long-term borrowings. Solvency ratios include the following
Debt-Equity Ratio :
This ratio indicates the relationship between the external equities or the outsiders fund and the
internal equities or the outsiders fund and the internal equities or the shareholders‟ fund. It
expresses the relationship between the external equities and internal equities or the relationship
between borrowed funds and ‘owners’ capital. It is a popular measure of the long-term financial
solvency of a firm. This relationship is shown by the debt equity ratio.
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Debt-equity ratio = Debt/Equity or outsiders fund/share holder fund.
Proprietary Ratio Or Equity Ratio:
Proprietary ratio relates to the proprietors funds to total assets. It reveals the owners contribution
to the total value of assets. This ratio shows the long-time solvency of the business it is calculated
by dividing proprietor’s funds by the total tangible assets.
Proprietary ratio= shareholder’s Fund/Total Tangible asset
Shareholders fund = Equity Share capital + Preference share capital + Reserves and
Surplus – Fictitious Assets.
Fixed Asset To Net Worth Or Proprietors Fund Ratio:
This ratio shows the relationship between fixed asset and shareholders fund. The purpose of this
ratio is to find out the percentage of owner’s fund invested in fixed assets
Fixed asset to net worth= Fixed asset/ Net worth or shareholder’s fund
Capital Gearing Ratio:
Capital gearing ratio is also known as leverage ratio. This ratio reflects the degree of equity
financing in the total capital structure of a concern. If the proportion of equity capital in total
finance is less than preference share capital and/or debentures, it is called high-geared capital. As
against this low geared capital is one where major portion of total capital is in the form of the
equity share capital. If the total capital of a concern consists of only equity share capital there
will be no capital leverage.
Capital gearing ratio= Fixed interest bearing funds/Equity share capital + reserves and
surpluses
3. Activity Ratios
Activity ratio measures the efficiency or effectiveness with which a firm manages its resources or
assets. These ratios are also called turn over ratios because they indicate the speed with which
assets are converted into sales. This ratio includes the following:
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Inventory Turnover Ratio:
This ratio indicates whether investment in inventory is efficiently used or not. This ratio indicates
the number of times the stock has been turned over during the period and evaluates the efficiency
with which a firm is able to manage its inventory.
Inventory turnover ratio= cost of goods sold/ average inventory
 Inventory Conversion Period
It is calculated to know the number of days required to sell the stock.
Inventory Conversion Period = No of Days / Stock Turn over Ratio
 Debtors turnover ratio:
It indicates the velocity of debt collection of the firm. It indicates the number of times average
debtors are turned over during a year.
Debtors turnover ratio= Net credit sales/ Average accounts receivable
 Average Collection Period
Average collection period indicates the average number of days for which a firm has to wait
before its receivables is converted into cash. It measures the quality of debtors.
Average Collection Period= Days in a Year/Debtors Turnover Ratio
 Working Capital Turnover Ratio:
Working capital turnover ratio indicates the velocity of the utilization of net working capital. This
ratio indicates the number of times the working capital is turned over in the course of a year. It is
a good measure over –trading and under-trading. This ratio measures the efficiency with
which the dug capital is being used by the firm. A higher ratio indicates the efficient
utilization of working capital.
Working capital turnover ratio= Net sales/ net working capital
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 Fixed Asset Turnover Ratio:
The ratio indicates the extent to which the investments in fixed assets contribute towards
sales. If compared with a previous year. This ratio measures the efficiency with which the
company is utilizing its investments fixed assets. This ratio is also known as sales to fixed
assets ratio. It indicates whether the investment in fixed assets has been judisious or not. The
ratio is calculated as follows.
Fixed asset turnover ratio= Net sales/ fixed assets
 Current Asset Turnover Ratio
It is measure of effectiveness with which current assets are being utilized in increasing the
profitability.
Current Asset Turnover Ratio = Net Sales/Current Assets
4.Profitability Ratios
Profitability ratios are the measure of its overall efficiency. Generally, profitability ratios can be
calculated in term of company's sale, investments and earnings and dividends. The following are
the main types of profitability ratios.
Net Profit Ratio :
This ratio is also called as the net profit to sales or net profit margin to ratio. It is an indicator of
efficiency and profitability of the business.Net profit ratio is the ratio of net profit (after taxes) to
net sales. It is expressed as percentage. These ratios also called net profit to sales or net profit
margin ratio.
Net Profit Ratio = (Net profit / Net sales) × 100
Operating Ratio
An Operating Ratio is a means of monitoring the efficiency of a business in terms of its operating
expenses against net sales:
Operating Ratio = Cost of Goods Sold + Operating Expenses / Net Sales x 100

Operating Margin Ratio
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An Operating Margin Ratio is a means of monitoring the efficiency of a business in terms of its
operating Profit against net sales:
Operating Margin Ratio = Operating Profit/ Net Sales x 100
Return On Net Capital Employed:

The return on capital employed is used as a measure of success of a business in realizing this
objective. ROCE should always be higher than the rate at which the company borrows; otherwise
any increase in borrowing will reduce shareholders’ earnings.
Return on Capital Employed= (Adjusted net profits*/Capital employed) ×100
Return On Equity:
The amount of net income returned as a percentage of shareholders equity. Return on equity
measures a corporations’ profitability by revealing how much profit a company generates with the
money shareholders’ have invested.
Return On Equity=(PAT/net worth)*100
 Earnings per share:

Earnings per share (EPS) shows profitability of the firm on a per share basis, it does not reflect
how much is paid as dividend and how much is retained in the business. EPS help in determining
the market price of the equity shares of the company. List of a comparison of EPS of the company
with another company will also help in deciding whether the equity share capital is being
effectively used or not. It helps in estimating the company’s capacity to pay dividend to its equity
shareholder. Earnings per share attract the performance and prospects of a company.
Earnings Per Share = Profit After Tax/ No. of Equity Shares
Dividend Per Share

It indicates the amount of profit distributed to shareholder per share. It is calculated as:
Dividend Per Share = Proposed Dividend/ No. of Shares
Price To Earning Ratio

This ratio indicates the no. of times the earning per share is covered by its market price.
It is used in financial forecasting and to know whether the shares of the company are undervalued
or overvalued. This ratio is of much help to the investors in deciding whether to invest in the
equity shares of a company at a particular market price or not.
Price To Earnings Ratio = Market Price of Share/EPS
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CHAPTER III
Aluminium INDUSTRY: AN
OVERVIEW
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INDUSTRY PROFILE
Global society faces a great challenge to shift human economic activity and lifestyles on to a
sustainable path in the 21st century, including meeting threats from climate change. The story of
the aluminium industry over the decades ahead must be one of how it is part of the solution for a
sustainable future.
The metal aluminium has a vital role to play in successfully addressing this sustainability
challenge. Aluminium is the third most abundant element in the earth's crust and constitutes
7.3% by mass. The existence of was first established in 1808 but there were a few historical
mentions of aluminium use. The aluminium metal was extracted from the ore after many years of
research. It was possible only in the year 1854 to develop a viable commercial production process
of aluminium. Primary aluminium is the hot molten metal that is produced in the smelter.
Secondary aluminium is the finished goods made from primary aluminium. Aluminium is a
young material, and in the little more than a century since its first commercial production, it has
become the world’s second most used metal after steel. The demand for aluminium products is
increasing year by year.
Modern life is full of advantages brought about by the use of aluminium. Some of the major
benefits of this unique metal are:
 Strength - Pure aluminium is soft enough to carve but mixed with small amounts of other
metal to form alloys, it can provide the strength of steel, with only one-third of the weight.
 Durability - Aluminium sprayed on a polymer forms a thin insulating sheet.
 Flexibility - Its combination of properties ensure aluminium and its alloys can be easily
shaped by any of the main industrial metalworking processes - rolling, extrusion, forging
and casting.
 Impermeability- Aluminium has excellent barrier function which makes it ideal for food
and drink packaging and containers. It keeps out air, light and microorganisms while
preserving the contents inside.
 Lightweight - Aluminium used in transport reducing the weight of the vehicles, hence in
providing fuel efficiency, reducing energy consumption and greenhouse gas emissions.
 Corrosion-resistant- The metal's natural coating of aluminium oxide provides a highly
effective barrier to the ravages of air, temperature, moisture and chemical attack,
making aluminium a useful construction material.
 Recyclable - Once made, aluminium can be recycled again and again, using only a very
small fraction of the energy required to make "new" metal. Recycling saves about 95% of
the energy required for primary production.
 Other - Aluminium is a superb conductor of electricity which has seen it replace copper in
many electrical applications. It is also non-magnetic and non-combustible, properties
invaluable in advanced industries such as electronics or in offshore structures.
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Aluminium –Indian Scenario
India is considered to be the fifth largest producer of Aluminium in the world. It accounts to
around 5% of the total deposits and produces about 0.8 million tons of aluminium. It is estimated
that if the country’s aluminium consumption rate maintains, it’d be having the reserves for over
350 years. India has confirmed 3 billion tons of Bauxite reserves out of the global reserve of 65
billion tones. The worldwide alumina production competence is around 58 million tones in which
India has 2.7 million tones. Most of the bauxite mines lie in Bihar, Karnataka and Orissa.
The Indian aluminum sector is characterized by large integrated payers like Hindalco and
National Aluminium Company (Nalco). The other producers of primary aluminum include Indian
Aluminum (Jindal), now merged with Hindalco, Bharat Aluminium (Barco) and Madras
Aluminium (Malco) the erstwhile PSUs, which have been acquired by sterlite Industries.
Consequently there are only three main primary metal producers in the sector.
Global Scenario
Primary aluminium production is concentrated in relatively few countries. China alone produced
26 percent of the world total in 2006.The top five producers—China, Russia, Canada, the United
States, and Australia—accounted for 59 percent of world output that year. Production is found
where energy is cheap because making aluminium uses large quantities of electricity. The world’s
largest aluminium smelter, now being planned for construction in Dubai, will have its own 2,600-
megawatt power plant.
Globally, newer packaging applications and increased usage in automobiles is expected to keep
the demand growth for aluminium over 5% in the long-term. Asia will continue to be the high
consumption growth area led by China, which is expected to continue to register double-digit
growth rates in aluminium consumption in the medium-term.
21
CHAPTER IV
HINDALCO INDUSTRIES Limited:
PROFILE
22
COMPANY PROFILE
ADITYA BIRLA GROUP: GNENRAL OVERVIEW
Aditya Birla group, with the turnover of over US $ 40 billion and 136,000
employees, is among top three leading business houses in India. The
Group has been ranked Number 4 in the global ‘Top Companies for
Leaders’ survey and ranked Number 1 in Asia Pacific for 2011. ‘Top
Companies for Leaders’ is the most comprehensive study of organizational
leadership in the world conducted by Aon Hewitt, Fortune Magazine, and
RBL (a strategic HR and Leadership Advisory firm).The Aditya Birla
group is India’s first truly MNC whose over 30% of revenues flow from
its operations across the world.
Mr. ADITYA
BIRLA
The group
BIRLAis transactional conglomerate with 72 state-of-the-art manufacturing units and sectorial
span, in India, Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia, and China.
(36 countries) Over 66 units in India as well as abroad (in Thailand, Indonesia, Malaysia,
Philippines, Egypt, Canada, Australia, China) and international trading operations spanning
several countries included Singapore, Dubai, Russia, Vietnam, Myanmar, and China make it
India’s first truly multinational conglomerate.
Committed to being a global benchmark group, the Aditya Birla group reaches out to the core
sector in India in industrial integral to the nation’s growth – cement, aluminum, fertilizers, viscose
staple fiber, branded apparel, viscose filament yarn, Non – ferrous metals, industrial chemicals,
carbon black, powder, telecommunication, sponge iron, insulators and financial services
The Aditya Birla group enjoys a front runner position:
Globally
23
A metals powerhouse among the world’s most cost efficient Aluminium and
copper producers. Hindalco–Novelis from its fold in fortune 500 company. It
is the largest Aluminium rolling company.
 It ranks as No.1 in viscose staple fiber

 The largest single location palm oil producer
 The third largest producer of insulators
 The third largest producer of carbon black
 The eleventh largest producer of cement and the largest in single
geography
 The largest single location copper smelter
 Among the world’s top 15 BPO’s and among India’s top three
 Among the best energy efficient fertilizer plants
 The largest Indian MNC with manufacturing operations in the USA
In ASIA
 The largest integrated aluminum producer

 Among the best energy-efficient fertilizer plants in Asia
In INDIA
 A premier branded garment player

 The second largest chore – alkali sector
 Among the top five mobile communication company
 Among the top three supermarket chains in the retail market
 Second largest player of viscous filament yarn
 Second largest private sector insurance company and a leading assets
management company
 Among the top 6 BPO companies
24
The Aditya Birla Group nurtures a culture where success does not come in the
way of the need to keep learning afresh , to keep experimenting.
Beyond Business – The Aditya Birla Group is :
 Working in 3900 villages.
 Reaching out to seven million people annually through the Aditya Birla centre
for community Initiatives and Rural Development ,Superheaded By Mrs.
Rajashree Birla.
 .Running 41 schools and 19 hospitals.
GROUP VISION
“To be the premium metals major, global in size and reach, with a passion for
excellence”
GROUP MISSION
“To relentlessly pursue the creation of superior shareholder value by

exceeding customer expectations profitability, unleashing employee potential
and being a responsible corporate citizen adhering to our values.”
GROUP VALUES
“Integrity, Commitment, Passion, Seamlessness, Speed”
25
HINDALCO: GENERAL OVERVIEW
HINDALCO was set up in collaboration with Kaiser Aluminium

and Chemicals Corporation USA, in a record time of 18 month.
Hindalco started its commercial production in the year 1962 with
aluminum facility at Renukoot in the eastern part of Uttar Pradesh with
a capacity of 20,000 tons per annum. Over the year, it has grown into
the largest integrated Aluminium manufacturer in the country. The
company has grown manifold and managed by Board of Directors,
with Shri Kumar Mangalam Birla as a chairman of the Board of
Directors. Mr. Debu Bhattacharya, the managing Director, leads the
Mr. Kumar entire Aluminium and copper business of the group. Day to day affairs
Manglam Birla of the company is managed by professional executives headed
by Shri Ratan k Shah as the Chief Operations Officer, Aluminium.
HINDALCO ranks as a largest Aluminium producer I India, who’s more than 58 % sale is in the
value added product and has more than 40% in total market share. Hindalco’s integrated
operations and operational efficiency have enabled the company to be one of the world’s lowest
cost producers of Aluminium.
HINDALCO also own a large Captive power thermal plant at Renusagar that meets the power
requirement of the company very effectively. Hindalco currently has a primary Aluminium
capacity of 3, 45,000 MTPA.
VISION
“To strengthen our position as a premium Aluminium company, sustaining Domestic Leadership
and Global Competitiveness through Innovation, Quality and Value Added Growth”
MISSION
“To pursue the creation of value for our Customers, Shareholders, Employees and society at
large”
26
STRATEGY
Efficiency Focus: - “To be one of the largest cost producers globally.”
Effectiveness focus: - “To be continued to remain market leader domestically.”
Growth focus: - “To peruse value adding growth opportunities in Aluminium.”QUALITY
POLICY
 We, at Hindalco, shall aim to achieve and sustain excellence in all our activities.
 We are committed to total customer satisfaction by providing products and services, which
meet or exceed the customer’s expectations.
 Modernization of the manufacturing facilities, stress on technological innovation and
training of employees at all levels shall be a continuous process in Hindalco.
 A motivated workforce with a sense of pride in the organization shall lead us towards total
quality
HISTORY
1958
 The Company was incorporated on 15th December, at Mumbai to manufacture alumina,
aluminium and aluminium fabricated items.
 The Company was formed by the house of Birla’s in collaboration with the Kaiser
Organization of U.S.A. According to the Company's agreement with Kaiser Aluminium
and Chemical Corporation, the Collaborators agreed to allot to the Collaborators 4, 80,000
fully paid-up equity shares of Rest 10 each.
The Company also concluded Technical Advisers and Consultant Agreements with Kaiser
Aluminium Technical Services Inc., California, who agreed to train the Indian technical
personnel, to supply the Company necessary technical advice, to assist in operating the
plant including aluminium fabrication and to provide information for a period of 20 years
on all technical matters. An agreement was also entered into with Henry J. Kaiser
Company for such design, engineering procurement and related services with regard to the
construction of the plant at Rihand as were to be performed outside India and with Kaiser
Engineers Overseas Corporation for such services to be rendered in India.
1962
 Commencement of production at Renukoot (Uttar Pradesh) with an initial capacity of
20,000 MTPA of aluminum metal and 40,000 MTPA alumina
1965
 Downstream capacities commissioned (rolling and extrusion mills at Renukoot)
1967
 Commission of Renusagar Power Plant- a strategic and farsighted move.
1991
 Beginning of major expansion programme.
1995
27
 Mr. Kumar Mangalam Birla takes over as chairman of Jindal board.
1998
 Foil Plant at Silvassa goes on stream.
 Hindalco attains ISO 14001 EMS certification.
1999
 Aluminium alloy wheels production commenced at Silvassa.
 Brownfield expansion of metal capacity at Renukoot to 2, 42,000 TPA
2000
 Acquisition in controlling stake in Indian Aluminum Company Limited (Jindal) with
74.6% equity holding.
2002
 The amalgamation of Indo Gulf Corporation Limited copper business, the Birla Copper
with Hindalco with the effect of 1st April 2002
2003
 Hindalco acquires Nifty copper mine in March 2003 through Aditya Birla Minerals’ Ltd
(ABML, formally Birla Minerals Put Ltd)
 ABML acquires the Mount Gordon Copper Mines in November 2003.
 Equity stake in Jindal increased to 96.5% through an open offer.
 Brownfield expansion of aluminum smelter at Renukoot to 3, 45,000 TPA
2004
 Copper smelter expansion to 2, 50,000 TPA
2005
 All business of Jindal, expect for the Kollur Foil Plant in Andhra Pradesh, merged with
Hindalco Industries Ltd.
 MOU signed with state government of Orissa and Jharkhand for setting up Greenfield
alumina refining, smelter and power plant.
 Commissioned Copper 111 expansion, taking capacity to 5, 00,000 TPA.
2006
 Hindalco announces 10:1 stock split. Each share with face value of Rest 10 per share split
into 10 shares of Re.1 each.
 Hindalco completes largest Right issue in the history of Indian capital market with total
size of Rest 22,266 million
 Equity offering and subsequent limitation of Birla Minerals’ Ltd. On Australia stock
Exchange.
 Signed an MOU with Government of Madhya Pradesh for Greenfield aluminium smelter in
Siddhi district of the state.
 Joint venture with Alumax USA for manufacture of high strength aluminium alloys for
application in aerospace, sporting goods and surface transport industries.
28
2007
 Successful acquisition of Novelis, making Hindalco the largest in aluminium rolling
andamong the global top five metals major, with the presence in 11 countries outside India.
Acquision of Alcan’s 45% equity stake in the Utkal Alumina project, thereby making
Hindalco the 100% project owner.
2008
 The company has issued rights in the ratio of 3:7at a premium of Rs.95/- Per Share.
2009
 Hindalco Industries, Aditya Birla group flagship firm, has decided to cut its overseas
operations and is restructuring its capital Expenditure in India in an effort to stabilize
operations. As part of this overall plan, Novelis, which Hindalco acquired for billion 2007,
is closing its sheet mill at Rogers tone in the UK, involving 440 job losses.
2010
 Hindalco ranked ninth across industries on Forbes Asia's Fab 50 Companies list of Asia's
50 most valued companies.
 Hindalco and Birla White declared winners in the Golden Peacock Awards for Corporate
Social Responsibility 2010 by an eminent international jury, headed by Justice P.M.
Bhagwati, the erstwhile Chief Justice of India.
 Hindalco wins Amity International Business School’s, ‘Amity Corporate Excellence
Award for Corporate Social Responsibility.’
 Hindalco has entered into an agreement with Coal India Ltd (CIL) for securing mine-
specific coal supplies to the Renukoot facility of Hindalco at 10 % premium over the
agreed price.
 Hindalco Industries Ltd has announced that its subsidiary - Utkal Alumina International
Ltd. (UAIL) has tied up a debt of Rest. 4,906 Core from a group of banks.
 Hindalco Industries Ltd, Utkal Alumina International Ltd. (UAIL), 100% subsidiary of
Hindalco, is setting up a 1.5 MPTA alumina Refinery in Rayagada district of Orissa. The
project will feed the alumina requirements of the Mahan and the Aditya smelters presently
 Under construction.
 Hindalco - Novelis Inc. Announces Pricing of .5 Billion Senior Unsecured Notes.
2011
 The Company is setting up a Greenfield Aluminium Smelter Project in Madhya Pradesh

(Mahan Project) with a capacity of 359,000 TPA of aluminium supported by 900 MW
captive power plants at a cost (Including financing cost) of Rest. 10,500 Cores.
 An Imminent name in aluminium production in India, Hindalco Industries has recently got
Government approval for cutting down the Forest of Orissa, Rayagada district. The
proposed reason for acquiring this green clearance is an alumina refinery project to be set
up in Rayagada that would involve an investment up to Rest. 6,000 Cores.
29
2012
 Hindalco Industries, an integral part of the Aditya Birla Group announced it is expecting to
commence its 1.5 million tons per Annum (MTPA) alumina refinery by January 2013,
located in Orissa.
 Moving against the trend of avoiding any plan by companies amid global economic
slowdown, Hindalco Industries has achieved financial closure for Rest 9,896 core debt for
its Greenfield smelter project at Lapanga in Odissa in one of the largest syndication in
recent times.
ORGANISATIONAL PROFILE OF HINDALCO

INDUSTRIES LIMITED
An industry leader in aluminium and copper, Hindalco Industries Limited, the metals Flagship
Company of the Aditya Birla Group is the world's largest aluminium rolling company and one of
the biggest producers of primary aluminium in Asia. Its copper smelter is the world’s largest
custom smelter at a single location.
Established in 1958, we commissioned our aluminium facility at Renukoot in eastern Uttar

Pradesh, India in 1962. Later acquisitions and mergers, with Jindal, Birla Copper and the Nifty
and Mt. Gordon copper mines in Australia, strengthened our position in value-added alumina,
aluminium and copper products.
The acquisition of Novelis Inc. in 2007 positioned us among the top five aluminium majors
worldwide and the largest vertically integrated aluminium company in India. Today we are a
metals powerhouse with high-end rolling capabilities and a global footprint in 13 countries. Our
consolidated turnover of USD 15.85 billion (Rest. 72,078 core) places us in the Fortune 500
league.
Hindalco's businesses creating superior value, Hindalco is one of the leading producers of
aluminium and copper. Our aluminium units across the globe encompass the entire gamut of
30
operations, from bauxite mining, alumina refining and aluminium smelting to downstream rolling,
extrusions, foils, along with captive power plants and coal mines.
Our copper unit, Birla Copper, produces copper cathodes, continuous cast copper rods and other
by-products, such as gold, silver and DAP fertilizers. Our units are ISO 9001:2000, ISO
14001:2004 and OHSAS 18001 certified. Several units have gone a step further with an integrated
management system (IMS), combining ISO 9001, ISO 14001 and OHSAS 18001 into one
business excellence model. We have been accorded the Star Trading House status in India.
Hindalco's aluminium metal is accepted for delivery under the High Grade Aluminium Contract
on the London Metal Exchange (LME). Our copper quality standards are also internationally
recognized and registered on the LME with Grade an accreditation.
Aluminium
Hindalco's major products include standard and specialty

grade alumina and hydrates, aluminiumingots, billets,
wire rods, flat rolled products, extrusions and foil.
The integrated facility at Renukoot houses an alumina
refinery and an aluminium smelter, along with facilities
for the production of semi-fabricated products; namely,
redraw rods, flat rolled products and extrusions. The
plant is backed by a co-generation power unit and a 742
MWcaptive power plant at Renusagar to ensure the
continuous supply of power for smelter and other operations.
A strong presence across the value chain and synergies between operations has given us a
dominant share in the value-added products market. As a step towards expanding the market for
value-added products and services, we have launched various brands in recent years — Ever last
roofing sheets, Freshwrapp kitchen foil and Freshpakk semi-rigid containers.
Copper
Birla Copper, Hindalco’s copper unit, is located at Dahej in
Gujarat, India. The unit has the unique distinction of being the
largest single-location copper smelter in the world. The smelter
uses state-of-the-art technology and has a capacity of 500,000
TPA.
Birla Copper also produces precious metals, fertilizers and

sulphuric and phosphoric acid. The unit has captive power plants for continuous power generation
and a captive jetty to facilitate logistics and transportation. Birla Copper upholds its longstanding
reputation for quality copper cathodes and continuous cast copper rods by assuring its
management processes meet the highest standards. It has acquired certifications such as ISO-
9001:2000 (Quality Management Systems), ISO-14001:2004 (Environmental Management
System) and OHSAS-18001:2007 (Occupational Health and Safety Management Systems).
Mines
Hindalco acquired two Australian copper mines, Nifty and Mt. Gordon, in 2003. The Birla Nifty
31
copper mine consists of an underground mine, heap leach pads and a solvent extraction and
electro winning (SXEW) processing plant, which produces
copper cathode.
The Mt. Gordon copper operation consists of an underground
mine and a copper concentrate plant. Until recently, the
operation produced copper cathode through
The ferric leach process.
In 2004, a copper concentrator was commissioned to

Provide concentrate for use at Hindalco’s operations in Dahej.
Both Nifty and Mt. Gordon have a long-term life of mine off-
take agreement with Hindalco for supply of copper concentrate
to the copper smelter at Dahej.
Cornerstones of Growth
Our well-crafted growth and integration hinges on the three cornerstones of cost competitiveness,
quality and global reach. We are also committed to the triple bottom line accountability of
economic, environment and social factors. Care for the community around our operating units is
best exemplified by our deep-rooted social commitment.
PRODUCTION CAPACITY
ALUMINA
700000 TPA RENUKOOT
350000 TPA BELGAUM
450000 TPA MURI
ALUMINIUM
345000 TPA RENUKOOT
161400 TPA HIRAKUD
EXTRUSIONS
230000 TPA RENUKOOT
8000 TPA ALUPURAM
FLAT ROLLED PRODUCTS

80000 TPA RENUKOOT
45000 TPA BELUR
50000 TPA TALOJA
30000 TPA MOUDA
REDRAW RODS
56400 TPA RENUKOOT
32
FOIL & PACKING

30000 TPA SILVASSA
4000 TPA KOLLUR
CAPTIVE POWER
742 MW RENUKOOT
638 MW HIRAKUD
84 MW RENUKOOT COGEN
30 MW MURI
MANAGEMENT TEAM
TABLE 4.1
Board of Directors
Board Of DIRECTORS
Mr. Kumar Mangalam Birla, Chairman
Mrs. Rajashree Birla
Mr. C. M. Maniar
Mr. M. M. Bhagat
Mr. K. N. Bhandari
Mr. A. K. Agarwala
Mr. Ram Charan
Mr. JagdishKhattar
Mr. D. Bhattacharya, Managing Director
Mr. M. Damodaran
Chief Financial Officer

Mr. Praveen Maheshwari
Head – Corporate Projects & Procurement Cell

Mr. B.B Jha
Company Secretary
Mr. Anil Malik
Business / Unit Head

Mr. Dilip Gaur, Group Executive President, Copper
Mr. SachinSatpute, Chief Marketing Officer, Aluminium
Mr. Satish M Bhatia, President, Foil and Packaging
Mr. R. S. Dhulkhed, Senior President, Operations
33
Mr. Sanjay Sehgal, President, Chemicals

Mr. D. K. Kohly, Chief Officer Operations, Renukoot Unit &Renusagar Units
Utkal Alumina International Ltd

Mr. Rajesh Jha, CEO
Novelis Inc.
Mr. Philip Martens, President and Chief Executive Officer
Aditya Birla Minerals Limited

Mr. D. Bhattacharya, Chairman
Mr. Sunil Kulwal, CEO and MD
Mr. Peter Torre, Company Secretary
MILESTONES
Over the years, Hindalco has grown into the largest vertical integrated aluminium company in
the country and among the largest primary producer of aluminium in Asia.
Hindalco enters ‘The Asia top 25’list of the CFO Asia annual report survey, the only Indian
Company in 2001
Amalgamation of Indo Gulf Corporation Ltd. copper business, Birla Copper, with Hindalco
with effect from 1 April 2002
In 2003, Hindalco acquires Nifty copper mine through Aditya Birla Minerals ltd.
In 2004, copper smelter expansion to 250,000 TPA.
In 2005, MoUs signed with state governments of Orissa and Jharkhand for setting up
Greenfield alumina refining, smelting and power plants.
In May 2006, enters into a joint venture with Essar Power (M.P.) Ltd. To develop and operate
coal mines at Mahan, Madhya Pradesh.
In 2007, Novelis become a Hindalco subsidiary with a completion of the acquisition process.
The transaction makes Hindalco the world’s largest aluminium rolling company and one of
the biggest producers of primary aluminium in Asia, as well as being India’s leading copper
producer.
In 2008, Right issue raised a total of Rest. 4,426 crore for re-financing bridge loan taken for
Novelis acquisition.
In 2009, raised USD 600 million for projects, the largest straight QIP in India
In 2011, achieved financial closure of two projects through debt financing – Utkal Alumina
for Rest. 4906 crore and Mahan Aluminium for Rs.7, 875 crore.
AWARDS AND RECOGNITIONS
 Hindalco bagged the prestigious CII – EXIM Bank Business Excellence Award 2011 for its
34
"strong commitment to excel on the journey towards business excellence".

 Birla Copper, a division of Hindalco, won the IMC Ramkrishna Bajaj Quality Award
Commendation Certificate.
 Hindalco Renusagar won the Greentech Safety Gold Award 2011 in power sector for
outstanding achievement in safety management, by Greentech Foundation, New Delhi.
 Renukoot
 "NIPM Gold Award for Best HR Practices" for the year 2010 by National Institute of Personal
Management (NIPM).
 Greentech Gold Safety Award 2010 for Occupational Health and Safety Management in the
Mining & Metals sector by Greentech Foundation, New Delhi.
 Greentech Environment Excellence Gold Award 2010 in the metals sector for its efforts
towards environment management, by Greentech Foundation, New Delhi.
 The Golden Peacock Award for Corporate Social Responsibility for the year 2010.
 Greentech HR Excellence Silver Award for 2010 for excellence in training.
 "Best Exporter Award" for 2010 by the Container Corporation of India for contributing to
India's economic progress through significant volume of exports.
 National Energy Conservation Award (Second Prize) 2010, in the metals sector, presented by
the Ministry of Energy, Government of India.
 Silver Certificate of "Indian Manufacturing Excellence Award — 2010" by Economic Times
and Frost & Sullivan.
 Birla Copper Dahej

 Greentech Environment Excellence Gold Award — 2010 in the mining and metals sector for
its efforts towards environment management by Greentech Foundation, New Delhi.
 Greentech Silver Safety Award 2010 for Occupational Health and Safety Management in the
mining and metals sector, by Greentech Foundation, New Delhi.
 Renusagar
 Greentech Gold Award 2010 in thermal power sector for outstanding achievement in
environment management, by Greentech Foundation, New Delhi."Commendation for Safety
Innovation Award 2010," by the Institution of Engineers (India).
 "Special Commendation for the Golden Peacock Environment Management Award 2010," by
the Institute of Directors, New Delhi.
 Hirakud
 Hirakud Power Plant awarded Third Prize in the state-level CII Orissa Award for Best
Practices in Environment, Safety and Health 2010.
 Hirakud Power awarded the Greentech Environment Excellence Gold Award 2010 in the
thermal power sector category.
 Muri
 National Award for Excellence in Water Management 2010 "Beyond the Fence" category, for
the indigenous work being done by the unit outside the fence as a corporate citizen and for
fulfilling its corporate responsibilities.
 Quality Circle Awards
35
 Gold Awards to four Hindalco Renukoot Quality Circle Teams — Kushal, Vaibhav, Pragati
and Nirantar — at the International Quality Circle Competition (IQCC 2010) held at
Hyderabad.
 Silver and Bronze Awards to Hindalco Hirakud Power Quality Circle Teams — Aryan and
Power — respectively at the International Convention on Quality Concept Circle (ICQCC
2010) held at Hyderabad.
 Quality Circle teams from Renukoot, Hirakud and Birla Copper Dahej Units excelled at the
National QC Convention (NCQC 2010), winning Par Excellence, Excellence, Distinguished
and Runners-Up Awards.
 International Asia Pacific quality award, Asia Pacific quality organization in 2009
 Green Tech Gold Award for environment, Green Tech. foundation, New Delhi 2009
 Golden Peacock environment Management award, Institute of Directors, 2009
 IMS Ram Krishna Bajaj National Quality Award Trophy, Indian merchants Chamber Ram
Krishna National Quality Award Trust, Mumbai, 2008
 Golden Peacock Nation Quality Award, Institute of director, 2008
 Green Tech Gold award for environment, Green Tech. foundation, New Delhi 2008
 Hindalco won the prestigious “D.L. Shsh National Award for Economics of Quality given by
Quality Council of India, presented by president of India, Hon. Dr. A.P.J. Abdul Kalam, on 9th
February of2007
 National Energy Conservation Award -2006 was presented by the ministry of power,
Government of India.
 Hindalco Hirakud Complex earned The Pollution Control Appreciation Award presented by
the Orissa State Pollution Control Board.
 The IT Department of Hindalco received prestigious IT certificate BSI15000 (IT Services),
ISO 9001 Software Development and BS7799 (Information Security). A Hindalco Renukoot
It function is the first in the group as well as in India to be recommended for all these
certification in an integrated manner.
 The company’s fabrication plant’s hot mill team won the prestigious Qualtch Award for their
project “reduction of time in work role change in time”.
 Hindalco, Renukoot has won the national Award for Excellence in water Management 2006
organized by CII.
 Hindalco Hirakud, power plant team bagged second prize at the state level CII Orissa Award
2006 for best practices in environment, safety and health.
 Hindalco Hirakund, Quality circle ‘jagruti’ bagged national level honors at the 20th national
convection of Quality circles, organized by quality circle forum of India.
 Hirakund power plant team received the state safety Award 2006 for their act of bravery in
saving lives and preventive a disaster by their proactive initiative to arrest the chlorine leakage
at the railway colony in Sambalpur.
 Renukoot complex named the winner of national safety Award 2005 for the second
consecutive year.
 Bauxite and coal mines, in all regions (Jharkhand, Maharashtra, Chhattisgarh and Orissa) have
won a host of award in safety, environment, pollution control and overall performance during
the mines safety week.
 “ICWAI national award for excellence in cost management-2005” presented by the institute of
cost and work accountants of India.
APPLICATION OF ALUMINIUM IN INDIA
36
o Automotive Industry
o Aviation Industry
o Railways
o Ship Building Industry
o Transportation Industry
o Dairy Industry
o Packing Industry
o Electrical Industry
o Household Utensils
o Consumer Durable Products
MAJOR ALUMINIUM PRODUCER INDUSTRIES IN INDIA

TABLE 4.2
COMPANY OWNERSHIP LOCATION CAPACITY
Hindalco A B Group Renukoot 345,000
Alpuram 14,000
Hirakud 65,000
Belgaum 31,000
NALCO Public sector Angul 345,000
BALCO Sterlight Korba 350,000
MALCO Sterlight Mettur 40,000
TABLE 4.3
TYPE PUBLIC
TRADED AS BSE:500440 NSE: HINDALCO BSE SENSEX
CONSTITUENT
INDUSTRY METALS
FOUNDED 1958
HEADQUARTERS MUMBAI , MAHARASHTRA , INDIA
AREA SERVED WORLD WIDE
37
KEY PEOPLE KUMAR MANGALAM BIRLA ( CHAIRMAN )

PRODUCTS ALUMINIUM AND COPPER PRODUCTS
REVENUE Rs. 816.04 BILLION ( 2012 )
NET INCOME Rs. 33.96 BILLION ( 2012 )

TOTAL ASSETS Rs. 225.54 BILLION
EMPLOYES 19,341 ( 2011 )
PARENTS ADITYA BIRLA GROUP
WEBSITE www.hindalco.com
Hindalco’s Product Range
Primary ary aluminium Alloy Ingots Billets

Ingots
Slab Aluminium Sheet Wire rods Sheet
Circle Alloy Wheel Watch
38
Bli ster Pack Ladder Doors
Handles Cans
CHAPTER V
ANALYSIS AND INTERPRETATION
39
1.LIQUIDITY RATIOS

CURRENT RATIO
Current ratio = Current Assets / Current Liabilities
TABLE 5.1
Current Ratio
Year Current Assets Current Liabilities Ratio
2008- 09 7,739.91 2,672.07 2.90
2009- 10 8,864.29 6,148.42 1.44
2010- 11 15,929.20 9,842.64 1.62
2011- 12 16,479.44 10,035.04 1.64
2012- 13 20,150.03 9,736.76 2.07
FIGURE 2
40
Interpretation and Analysis:
The normal current ratio is 2:1. The above table shows current ratio is more than 2% in first and
last year of the study. But in 2009-2012 the current ratio is lower than the normal. This shows that
the company is enjoying credit worthiness in the year 2012-2013. This shows that liquidity of the
firm has increased with time. Good current ratio indicates that company will be able to pay off its
current liabilities as and when required and hence it should be maintained close to the standard
value of 2:1.This can be 3:1 also in case of specific companies depending upon the nature of the
working of company.
QUICK RATIO
It is calculated by:
Quick ratio= Quick assets / Current Liabilities
TABLE 5.2
Quick Ratio
Year Quick Asset Current Liabilities Ratios
2008- 09 3,669.77 2,672.07 1.37
2009- 10 2,942.88 6,148.42 0.48
2010- 11 8,277.80 9,842.64 0.84
2011- 12 8,736.58 10,035.04 0.87
2012- 13 12,447.42 9,736.76 1.28
FIGURE 3
41

The quick ratio of the firm has increased over time. This shows that the firm will have difficulty
to pay off their current liabilities. This ratio concludes the most extreme kind of liquid assets and
liabilities. Even the stock is not been included so this ratio is concerned only with the pure
liquidity of the company. This has shown that the company is having a very sound kind of
liquidity position and it has no any such problems in paying off their current liabilities now as
well as in the upcoming near future.
A quick ratio of 1:1 is usually considered to be good and satisfactory. Here, in all year’s figures
shows a sound quick ratio except 2009-2010. In 2008-09, there is a highest ratio. It is due to the
increase in cash and bank balance in the year 2009.
ABSOLUTE LIQUID RATIO
Absolute liquid ratio = Cash + Marketable securities / Current Liabilities
TABLE 5.3
Absolute Liquid Ratios
Cash + Marketable
Year securities
Current Liabilities Ratios
2008- 09 843.72 2,672.07 0.32
2009- 10 140.21 6,148.42 0.02
2010- 11 233.39 9,842.64 0.02
2011- 12 722.30 10,035.04 0.07
2012- 13 1,497.82 9,736.76 0.15
FIGURE 4
42

The above table and diagram shows the absolute ratio for the study period 2008-09 to 2012-13.
There is fluctuation in the absolute ratio. It was 0.32 in the year 2008-09. In 2009-10 and 2010-
11 it was 0.02. It was 0.07 in 2011-12 and 0.15 in 2012-13. Cash ratio has increased
substantially however it is still low. This shows that although the company now has better
immediate cash to pay off their current liabilities immediately however it still has scope for
improvement.
2. SOLVENCY RATIOS
Many financial analyses are interested in the relative use of debt and equity in the firm. The term
‘solvency’ refers to the ability of a concern to meet its long-term obligation. Accordingly, long-
term solvency ratios indicate a firm’s ability to meet the fixed interest and costs and repayment
schedules associated with its long-term borrowings. Solvency ratios include the following:
DEBT-EQUITY RATIO :
Debt-equity ratio = Debt/Equity or outsiders fund/share holder fund.
TABLE 5.4
Debt-Equity Ratio
Year Debt Equity Ratio
2008- 09 8,315.30 23,758.00 0.35
2009- 10 6,419.53 29,700.00 0.22
2010- 11 8,910.00 29,700.00 0.30
2011- 12 14,571.91 32,032.00 0.45
2012- 13 24,144.77 33,972.39 0.71
43
FIGURE 5

Lower values of debt-to-equity ratio are favorable indicating less risk. Higher debt-to-equity
ratio is unfavorable because it means that the business relies more on external lenders thus it is at
higher risk, especially at higher interest rates. Hindalco has a debt equity ratio lower than 1
means that more assets are financed by shareholders’ that those financed money by debt.
In all the years the equity is more when compared with borrowings. Hence the company is
maintaining its debt position.
PROPRIETARY RATIO OR EQUITY RATIO:
Proprietary ratio= shareholder’s Fund/Total Tangible asset
Shareholders fund = Equity Share capital + Preference share capital + Reserves and
Surplus – Fictitious Assets.
TABLE 5.5
Proprietary Ratio
Year Shareholders Fund Total Assets Ratio
2008- 09 23,758.00 33,493.28 0.71
2009- 10 27,911.00 35,634.31 0.78
2010- 11 29,700.00 46,536.34 0.64
2011- 12 32,032.00 55,647.62 0.58
2012- 13 33,972.00 66,618.56 0.51
FIGURE 6
44
The above table and diagram shows the proprietary ratio during the study period. In all the years
the owner's contribution to the total assets was appropriate and they maintain their share in the
company's assets.
A Proprietary ratio of 0.33 is usually considered to be good and satisfactory. Here, in all year
figures shows a sound position. In 2008-2011 the company shows a better proprietary ratios two
times more than its standard.
FIXED ASSET TO NET WORTH OR PROPRIETORS FUND RATIO:
Fixed asset to net worth= Fixed asset/ Net worth or shareholder’s fund
TABLE 5.6
Fixed asset to net worth Ratio

Year Fixed Assets Net worth Ratio
2008- 09 9,276.60 23,758.00 0.39
2009- 10 11,437.61 27,911.00 0.41
2010- 11 30,607.14 29,700.00 1.03
2011- 12 39,168.18 32,032.00 1.22
2012- 13 46,468.53 33,972.00 1.37
FIGURE 7
45
The data shows the relationship between shareholders funds and fixed asset. In the year of 2008-
09 and 2009-10 the shareholders fund is partialy invested in fixed assets. And thereafter in the
upcoming years more amount is invested in Fixed assets.
CAPITAL GEARING RATIO:
Capital gearing ratio= Fixed interest bearing funds/Equity share capital + reserves and
surpluses
TABLE 5.7
Capital-Gearing Ratios
Equity Share+ Reserves and
Year Debt CGR
surplus
2008- 09 8,324.00 23,758.00 0.35
2009- 10 6,357.00 27,911.00 0.23
2010- 11 9,038.00 29,700.00 0.30
2011- 12 14,572.00 32,032.00 0.45
2012- 13 24,144.00 33,972.00 0.71
46
FIGURE 8
This ratio reflects the degree of equity financing in the total capital structure of a concern. The
above table and diagram shows the relationship between Equity and debt in percentage. Here the
company is enjoying leverage because the capital structure include debt, preference shares and
Equity.
3. ACTIVITY RATIOS
Activity ratio measures the efficiency or effectiveness with which a firm manages its resources
or assets. These ratios are also called turn over ratios because they indicate the speed with which
assets are converted into sales. This ratio includes the following:
INVENTORY TURNOVER RATIO:
Inventory turnover ratio= cost of goods sold/ average inventory


TABLE 5.8
Inventory Turnover Ratio
Year Cost of goods sold Avgas Inventory Ratio
2008- 09 14,446.89 4,584.03 3.2
2009- 10 16,386.11 4,995.78 3.3
2010- 11 17,871.02 6,786.41 2.6
2011- 12 20,508.20 7,697.13 2.7
47
2012- 13 16,553.45 7,722.74 2.1
FIGURE 9

The above table and diagram shows the relationship between costs of goods sold and average
stock. During the year 2008-09 it is 3.2 which show higher position of cost of goods sold. In the
years of study it is shown above that the cost of goods sold are almost 2-4 times of the average
stock. But at the same time during 2012-13 it is only 2.1 which show that more stock was
remaining in the company. This suggests that the company is improving year by year in its
operation and its sale is also increasing year after year. ). If we compare the data of last two years,
we can see that approx 25% increase in COGS led 30% increase in the inventory level, which is
not a good sign for the company.
 INVENTORY CONVERSION PERIOD

It is calculated to know the number of days required to sell the stock.
Inventory conversion period = No. of days In a year

Stock turnover ratio
TABLE 5.9
Days of Inventory Holding
Year Number of Days Ratio DIH
2008- 09 365 3.15 116
2009- 10 365 3.28 111
2010- 11 365 2.63 139
2011- 12 365 2.66 137
48
2012- 13 365 2.14 170


FIGURE 10



It shows a Fluctuating trend but it is increasing to the last year. During the year 2012-2013 it is
increased to 170 days. 

In days also we can see that the inventory turnover has been increased as compared to previous
year. But because of good inventory management, Hindalco maintained inventory turnover for
the year 2010 and 2011despite of much increase in the production. So company needs to improve
and implement better inventory control policies.


DEBTORS TURNOVER RATIO:
Debtors turnover ratio= Net credit sales/ Average accounts receivable


TABLE 5.10
Debtors Turnover Ratio
Year Net Sales Debtors DTR
2008- 09 18,052.97 1201.22 15
2009- 10 19,408.02 1311.87 15
2010- 11 23,859.21 1268.99 19
2011- 12 26,596.78 1427.45 19
49
2012- 13 25,784.31 1515.04 17


FIGURE 11

Here, In spite of increase in sales from 2011 to 2012, total debtors have been increased, which
indicated that the company is not having very effective credit policy. But the same case is not for
the previous years.
Whereas if we analyze the debtor’s turnover ratio, we can say that the company is capable of
reducing the period of debtors to turnover. Higher the debtor’s turnover ratio, lesser time it will
take to collect debts. In 2012, Period of Debtors to Turnover has been reduced to approx. 19
days. Last year also the same debtor turnover is found in the research, it implies that there is not
any improvement in turnover in spite of increase in sales. Although the balance of debtor comes
down considerably but still there is scope in Debtors Management for the Company


 AVERAGE COLLECTION PERIOD
Average Collection Period= Days in a Year/Debtors Turnover Ratio


TABLE 5.11

AVERAGE COLLECTION PERIOD
NUMBER OF AVERAGE
Year DAYS
DTR COLLECTION
PERIOD
2008- 09 365 15 24
2009- 10 365 15 25
2010- 11 365 19 19
50
2011- 12 365 19 20
2012- 13 365 17 21

FIGURE 12


In 2011, Period of Debtors to Turnover has been reduced to approx. 20 days. Debtors level of 20
days in the industry is considerably good and shown an improvement from the past. Although
the balance of debtor comes down considerably but still there is scope in Debtors Management
for the Company.
During the initial years ratio shows an increasing trend, after that it decreases. That means the
Hindalco made a better attempt for the collection of money from the debtors. But during the last
years Average collection period shows an increasing Trend, but there is only slight change.
WORKING CAPITAL TURNOVER RATIO:
Working capital turnover ratio= Net sales/ net working capital
TABLE 5.12
Working Capital Turnover Ratio

Year Net Sales WC WCTR
2008- 09 18,052.97 14,047.14 1.29
2009- 10 19,408.02 2,715.87 7.15
2010- 11 23,859.21 6,104.56 3.91
51
2011- 12 26,596.78 6,444.40 4.13

2012- 13 25,784.31 10,413.27 2.48
FIGURE 13

If we see from the above table, it can be clearly seen that net working capital has come down to
Rs. 2,715.87 crores in 2009-10 from Rs. 14,047.14 crores in 2008-09. But if we see the working
capital of 2009-10, it was lesser as compared to 2010-11. The increase in net working capital in
2010-13 is because of increased production.
This improvement does not come accidently but considerable measures have been taken to control
working capital in organization in financial year 2010-13.There is direct relation of working
capital requirement with Debtors and Inventory. Above data indicates that company has taken
certain strategic measures to manage its Debtor and Inventory.
FIXED ASSET TURNOVER RATIO:
Fixed asset turnover ratio= Net sales/ fixed assets
TABLE 5.13
Fixed Asset Turnover Ratio

Year Net Sales Fixed Assets FATR
2008- 09 18,052.97 9,276.60 1.9
2009- 10 19,408.02 11,437.61 1.7
2010- 11 23,859.21 30,607.14 0.8
52
2011- 12 26,596.78 39,168.18 0.7

2012- 13 25,784.31 46,468.53 0.6
FIGURE 14
The above table and diagram shows the relationship between the fixed assets and sales. The sale
is 2 times more than the fixed assets 2008-09. It can be observed that in the year 2010-11 the
fixed assets value increased a lot and which shows that there is an additions made to the fixed
assets, similarly the sales was also increased from 19,408.02 (2009-10) to 23,859.21 (2006-
07). However in the upcoming years the sales has not gradually increased as to the fixed assets.
Therefore fixed asset turnover shows a decreasing trend.
 CURRENT ASSET TURNOVER RATIO

It is measure of effectiveness with which current assets are being utilized in increasing
the profitability.
Current Asset Turnover Ratio = Net Sales/Current Assets
TABLE 5.14
Current Asset Turnover Ratio

Year Net Sales Current Asset CATR
2008- 09 18,052.97 7,739.91 2.3
2009- 10 19,408.02 8,864.29 2.2
53
2010- 11 23,859.21 15,929.20 1.5

2011- 12 26,596.78 16,479.44 1.6
2012- 13 25,784.31 20,150.03 1.3
FIGURE 15
The ratios in the years clearly indicate that there has been efficient use of Current assets in the first
two years not afterwards. Consecutive growth indicates that the proper functioning and
management of resources has been considerably satisfactory in terms of net sales. Thus the
company's sales were almost directly proportionately in the first two years of the study and then in
the year 2010-11 it was adversely affected.
4.PROFITABILITY RATIOS
Profitability ratios are the measure of its overall efficiency. Generally, profitability ratios can be
calculated in term of company's sale, investments and earnings and dividends. The following are
the main types of profitability ratios.
NET PROFIT RATIO :
Net Profit Ratio = (Net profit / Net sales) × 100

TABLE 5.15
Net Margin Ratio (NMR)
Year PAT Net Sales Ratio
54
2008- 09 2,230.00 18,052.97 12%

2009- 10 1,916.00 19,408.02 10%
2010- 11 2,137.00 23,859.21 9%
2011- 12 2,237.00 26,596.78 8%
2012- 13 1,699.00 25,784.31 7%

FIGURE 16

There is no rigid standard to this ratio, A higher ratio, better is the operational efficiency of the
firm. In the year 2012-13 the NP ratio has decreased by 5% from 2008-09, it is due to the decrease
in the profit margin and also increased operating expenditure. This means that either there is any
defect in pricing the product or excess non-value added expenditures which reduces the net profit
of the company. The sales of the organization are also decreasing and hence management must
take care of the quality and market situations into consideration to resolve the issue so that it may
bring good profits to the organization.
OPERATING MARGIN RATIO
An Operating Margin Ratio is a means of monitoring the efficiency of a business in terms of its
operating Profit against net sales:
Operating Margin Ratio = Operating Profit/ Net Sales x 100

TABLE 5.16

Operating Margin Ratio
Year Operating Profit Net Sales Ratio
2008- 09 3,036.00 18,052.97 17%
55
2009- 10 2,950.00 19,408.02 15%

2010- 11 3,155.00 23,859.21 13%
2011- 12 3,105.00 26,596.78 12%
2012- 13 1,499.00 25,784.31 6%

FIGURE 17

From the above data it is cleared that operating margin ratio is continuously decreasing, so lower
the ratio of the Hindalco, the better will be the position of the concern which means a higher
margin of profit on sale to meet its fixed obligation like interest and also shows the margin for
dividends etc.


RETURN ON NET CAPITAL EMPLOYED:
The return on capital employed is used as a measure of success of a business in realizing this
objective. ROCE should always be higher than the rate at which the company borrows;
otherwise any increase in borrowing will reduce shareholders’ earnings.
Return on Capital Employed= (Adjusted net profits*/Capital employed) ×100
TABLE 5.17
Return on Capital Employed

Year EBIT Capital Employed ROCE
56
2008- 09 3,028.00 33,493.00 9.04

2009- 10 2,543.00 35,634.00 7.14
2010- 11 2,835.00 40,025.00 7.08
2011- 12 3,031.00 47,829.00 6.34
2012- 13 2,483.00 59,671.00 4.16
FIGURE 18
The future maintainable profits have not matched the pace with the increase in company’s
capital employed. Since capital employed comprises of shareholder’s funds, reserves and surplus
and loans, it has been observed that shareholder’s fund has increased a little and the loans has
also increased but resulting in blocking of funds.
RETURN ON EQUITY
The amount of net income returned as a percentage of shareholders equity. Return on equity
measures a corporations’ profitability by revealing how much profit a company generates with
the money shareholders’ have invested.
Return On Equity=(PAT/net worth)*100
Net worth =share capital+ general reserve-miscellaneous expenditure
TABLE 5.18
Return On Equity
57
Year PAT Net worth ROE

2008- 09 2,230.00 23,758.00 9.39
2009- 10 1,916.00 27,911.00 6.86
2010- 11 2,137.00 29,700.00 7.20
2011- 12 2,237.00 32,032.00 6.98
2012- 13 1,699.00 33,972.00 5.00

FIGURE 19

Due to decrease in financial leverage Net Worth of company has increased. Also the future
maintainable profit has not increased in the same proportion as the Net Worth of the company
thus ROE for the company has gone down.
 EARNINGS PER SHARE
Earnings per share (EPS) shows profitability of the firm on a per share basis, it does not reflect
how much is paid as dividend and how much is retained in the business.
Earnings Per Share = Profit After Tax/ No. of Equity Shares
TABLE 5.19
Earnings Per Share (EPS)
Year PAT No. of Equity Shares EPS
2008- 09 2,230.00 150.47 14.82
58
2009- 10 1,916.00 177.08 10.82

2010- 11 2,137.00 191.48 11.16
2011- 12 2,237.00 191.48 11.68
2012- 13 1,699.00 191.48 8.87
FIGURE 20


FY13 has a low EPS ratio than FY12, so Hindalco is having not so good prospects and capacity
to declare dividends on equity shares. In 2008-09 Hindalco industries shows a higher EPS
compared to other years. Afterwards its shows a decreasing trend.

 DIVIDEND PER SHARE
It indicates the amount of profit distributed to shareholder per share. It is calculated as:
Dividend Per Share = Proposed Dividend/ No. of Shares

TABLE 5.20
Dividend Per Share (DPS)
Year Proposed Dividend No. of Equity Shares DPS
2008- 09 203.13 150.47 1.35
2009- 10 238.95 177.00 1.35
2010- 11 287.17 191.48 1.50
59
2011- 12 296.76 191.48 1.55

2012- 13 259.65 191.48 1.36

FIGURE 21
Higher the ratio the better is the position for the company, as we can see DPS of Hindalco
industries has decreased from last year year’s DPS. During 2010-11 and 2011-12 DPS of
Hindalco Industries is higher. But in the first two and last year it is decreasing.
TABLE 5.21
WORKING CAPITAL OF HINDALCO INDUSTRIES LTD
FOR THE YEARS 2009-2013
Particulars 2009 2010 2011 2012 2013
(A) Current assets
Current investments 0.00 0.00 5,197.09 4,583.40 6,431.96
Inventories 4,070.14 5,921.41 7,651.40 7,742.86 7,702.61
Trade receivables 0.00 0.00 1,255.49 1,427.45 1,515.04
Cash & bank balances 8,437.20 140.21 233.39 722.30 1,497.82
60
Short term loans 15,730.50 1,437.37 1,344.75 1,647.65 2,272.42
other current assets 517.80 53.43 247.08 355.78 730.18
Sundry debtors 12,012.20 1,311.87 0.00 0.00 0.00
Total (A) 40,767.84 8,864.29 15,929.20 16,479.44 20,150.03
(B) current liabilities

Short term borrowings 0.00 0.00 3,890.35 3,456.78 3,701.72
trade payables 0.00 0.00 4,082.95 4,659.77 3,051.52
other current liabilities 18,689.10 5,426.93 1,053.91 998.69 1,924.09
short term provisions 8,031.60 721.49 815.43 919.88 1,059.43
total (B) 26,720.70 6,148.42 9,824.64 10,035.04 9,736.76

Working capital(A-
14,047.14 2,715.87 6,104.56 6,444.40 10,413.27
B)
Increase/decrease in - -11,331.27 3,388.69 357.84 3,968.87
W.C
Inference:
The above data shows that working capital is increasing in comparison to last year which is good
for the liquidity of the company. Current assets are increased by 17.89% and current liabilities are
decreased by 0.78% in 2012. This means that current assets are adequate to meet its currents
liabilities as there is decrease in current liabilities. The current ratio of the company is 1.64. And
also in 2013 there is an increasing Trend. It shows that company is having good liquidity position
but they should try to improve it.
TABLE 5.22
CASH FLOW STATEMNT FOR THE YEAR ENDED

31st March 2010
Particulars 2009-2010 2008-2009
A. Cash Flow From Operating Activities
Net Profit Before Tax 2,264.56 2,690.32
Adjustment For
Interest and Finance Charges 278.00 336.93
Depreciation 671.36 644.34
Impairment -4.15 0.93
61
Unrealized Foreign Exchange Gain/Loss -34.68 170.05

Employee Stock Option 1.00 2.09
Provisions and provisions written back -29.47 -51.83
Loss/Gain on Derivative Transactions 26.60 0.00
Provision/write back for Diminution in
0.29 -8.66
Carrying Cost Investments (Net)
Investing Activities (Net) -254.87 -620.39
Operating Profit Before Working Capital
2,918.64 3,163.78
Changes
Changes In Working Capital:
Change in inventories -1,851.27 1,027.77
Change in Trade and other Receivables -507.37 379.35
Change in Trade Payables 1,549.68 -958.47
Cash Generation From Operation 2,109.68 3,612.43
Payment Of Direct Taxes -392.40 -442.04
Net Cash Generated/-Operating Activities 1,717.28 3,170.39
B. Cash Flow From Investing Activities
Purchase of Fixed Assets -2,641.59 -1,000.75
Sale of Fixed Assets 22.36 33.90
Purchase/Sale of Shares of Subsidiaries -816.06 -10,406.75
Purchase/Sale of Investment -1,501.49 5,506.61
Loans and Repayment of Advances and
540.44 -597.69
Loans from Subseries
Interest Received 95.01 104.71
Dividend Received 226.74 586.55
Net Cash Generated/ Investing Activities -4,074.59 -5,773.42
C. Cash Flow From Financing Activities
Proceeds from issue of shares and warrants 2,750.20 4,425.74
Redemption of Preferece Shares -0.41 0.00
Proceeds /Repayment of long term
-793.59 -403.46
Borrowings
Proceeds/Repayment of short term
607.80 210.65
Borrowings
Interest and Finance Charges -641.46 -668.58
Dividend Paid (including Dividend Tax) -268.57 -265.52
Net Cash Generated/Financing Activities 1,653.97 3,298.83
Net Increase/Decrease in Cas and Cash
-703.34 695.80
Equivalent
Add: Opening Cash and Cash Equivalent 835.18 139.38
Closing Cash and Cash Equivalent 131.84 835.18
62
Inference:
The above statement shows that cash flows from operating activities increased from
3,170.39 to 1,717.28. Cash generated from investing activities shows a decrease from
(5,773.42) to (4,074.59). Cash generated from financing activities becomes 1,653.97 from
3,298.83 Here the cash and cash equivalent decreased to 131.84 from 835.18.
TABLE 5.23
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST
MARCH 2011
CASH FLOW STATEMENT (Rest. in Core)
Particulars 2009-2010 2010-2011
A. Cash Flow From Operating Activities

Net Profit Before Tax 2,264.56 2,594.74
Adjustment For
Interest and Finance Charges 278.00 219.96
Depreciation 671.36 687.48
Impairment -4.15 61.45
Unrealized Foreign Exchange Gain/Loss -34.68 -35.93
Employee Stock Option 1.00 1.34
Provisions and provisions written back -29.47 -31.89
Loss/Gain on Derivative Transactions 26.60 61.45
Provision/write back for Diminution in
0.29 5.15
Carrying Cost Investments (Net)
Investing Activities (Net) -254.87 -317.17
Operating Profit Before Working Capital
2,918.64 3,185.13
Changes
Changes In Working Capital:
Change in inventories -1,851.27 -1,730.78
Change in Trade and other Receivables -507.37 -61.95
Change in Trade Payables 1,549.68 1,601.39
Cash Generation From Operation 2,109.68 2,993.79
Payment Of Direct Taxes -392.40 -736.42
Net Cash Generated/-Operating Activities 1,717.28 2,257.37
B. Cash Flow From Investing Activities
Purchase of Fixed Assets -2,641.59 -5,749.36
Sale of Fixed Assets 22.36 6.92
63
Purchase/Sale of Shares of Subsidiaries -816.06 -255.23

Return on Capital from Subsidiary (Net) 0.00 2,921.34
Purchase/Sale of Investment -1,501.49 553.07
Loans and Repayment of Advances and Loans
540.44 0.34
from Subseries
Interest Received 95.01 67.71
Dividend Received 226.74 291.18
Net Cash Generated/ Investing Activities -4,074.59 -2,164.03
C. Cash Flow From Financing Activities
Proceeds from issue of shares and warrants 2,750.20 9.09
Redemption of Preferece Shares -0.41 0.00
Proceeds /Repayment of long term Borrowings -793.59 -3.16
Proceeds/Repayment of short term Borrowings 607.80 904.55
Interest and Finance Charges -641.46 -609.47
Dividend Paid (including Dividend Tax) -268.57 -301.23
Net Cash Generated/Financing Activities 1,653.97 -0.22
Net Increase/Decrease in Cas and Cash
-703.34 93.12
Equivalent
Add: Opening Cash and Cash Equivalent 835.18 131.84
Closing Cash and Cash Equivalent 131.84 224.96
Inference:
The above statement shows that cash flows from operating activities increased from 1,717.28 to
2,257.37. Cash generated from investing activities shows a increased from (4,074.59) to
(2,164.03). Cash generated from financing activities becomes from (-0.22) to 1,653.97. Here the
cash and cash equivalent increased to 224.96 from 131.84.
TABLE 5.24
CASH FLOW STATEMENT FOR THE YEAR ENDED
31ST MARCH 2012
CASH FLOW STATEMENT (Rupees. in Core)
Particulars 2010-2011 2011-2012
(A) Cash flow from operating activities-

Net profit before tax 2,594.74 2,736.95
Adjustment for :
Finance costs 219.96 293.63
Depreciation and amortization 687.48 689.97
64
Loss/(gain) on derivative transactions (net) 61.45 3.34

Unrealized foreign exchange(gain)/loss(net) -35.93 52.38
Employees stock option scheme 1.34 1.29
Provisions/(provisions returned back) net -31.89 -39.92
Provision/(write back) for diminution in carrying
5.15 0.88
cost of investment(net)
Investing activities (net) -317.17 -562.01
Operating profit before working capital changes 3,185.13 3,168.95
Changes in working capital :-
Change in inventories -1,730.78 -91.46
Change in trade and other receivables -61.95 -1,018.06
Change in trade and other payables 1,601.39 532.12
Cash generation from operations 2,993.79 2,591.55
Payment of direct taxes(net of refunds) -736.42 -469.48
Net cash generated/(used)-operating activities 2257.37 2122.07
(B) cash flow from investment activities-

Purchase of fixed assets -579.36 -7,168.16
Sale of fixed assets 6.92 11.20
Purchase of share of subsidiaries(net) -255.23 -520.94
Return of capital from subsidiaries(net) 2,921.34 66.86
Sale of investments(net) 553.07 623.67
Loans/repayment of advances& loans from
0.34 70.04
subsidiaries (net)
Interest received 67.71 94.09
Dividend received 291.18 456.28
Net cash generated/(used)-investing activities -2,164.03 -6,366.69
(C) cash flow from financing activities-

Proceeds from issue of shares(net of expenses) 9.09 1.46
Proceeds from issue of share warrants 0.00 541.31
Proceeds of long-term borrowings 0.00 5,969.11
Repayment of long-term borrowings -3.16 -1.53
Proceeds/(repayment) of short-term
904.55 -433.58
borrowings(net)
Finance costs paid -609.47 -1,019.18
Dividend paid(including dividend tax) -301.23 -324.03
Net cash generated/(used)-financing activities

-0.22 4,733.56
65
Net increase/(decrease)in cash & cash

93.12 488.67
equivalent
Add:-opening cash & cash equivalents 131.84 224.96
Closing cash & cash equivalents 224.96 713.63
Inference:
Here the cash flows from operating activities decreased to 2122.07 in 2012 which was 2257.37 in
2011.The statement also shows that cash flows from investing activities shows a balance of
(6,366.69) in 2012 which was (2,164.03) in 2011. Cash generated from financing activities shows
a positive balance in 2012 (ie. +4,733.56), but it becomes negative on 2011 (ie.-0.22). Here the
closing cash and cash equivalent increased to 713.63 from 224.96.
TABLE 5.25
COMMON SIZE INCOME STATEMENT (2008-09 &2009-10)
Particulars 2008-2009 % 2009-2010 %
Income
Gross Sales And Operating Revenues 19,718.34 100% 20,585.11 100%
Less: Excise Duty 1,498.69 8% 1,048.83 5%
Net Sales And Operating Revenues 18,219.65 92% 19,536.28 95%
Other Income 636.65 3% 259.85 1%
18,856.30 96% 19,796.13 96%
Expenditure
66
Increase/Decrease in Stock 520.58 3% -755.25 -4%

Trade Purchases 113.04 1% 71.99 0%
Manufacturing and Other Expenses 14,550.16 74% 17,269.62 84%
Interest and Finance Charges 336.93 2% 278.00 1%
Depreciation 644.34 3% 671.36 3%
Impairment 0.93 0% -4.15 0%
-
-16,165.98
-82% 17,531.57 -85%
Profit Before Tax 2,690.32 14% 2,264.56 11%
Provision For Current Tax 478.11 2% 374.20 2%
Provision For Deferred Tax 21.40 0% 87.90 0%
Provision For Fringe Benefit Tax 11.37 0% 0.00 0%
Tax Adjustment For Earlier Years -150.83 -1% -113.17 -1%
Net Profit 2,230.27 11% 1,915.63 9%
Balance bought forward from Previous
300.00 300.00
year 2% 1%
Transfer From Debenture Redemption
0.00 87.50
Fund 0% 0%
Balance Available For Appropriation 2,530.27 13% 2,303.13 11%
Inference:
The common size income statement for the year 2009 to 2010 reveals the following. The sales
figure increasing year after year. It increased about Rs. 19,536.28 Core. Other expenses were
fluctuating. The other income of the company was decreased year by year.
TABLE 5.26
Particulars 2009-2010 % 2010-2011 %
Income
Less: Excise Duty 1,048.83 4% 1,488.91 6%
Other Income 259.85 1% 347.49 1%
19,796.13 96% 24,206.70 95%
67
Expenditure
Increase/Decrease in Stock -755.25 -3% -394.67 -2%
Cost of Raw Materials Consumed 0% 15,530.94 61%
Employee Benefit Expenses 0.00 0% 1,040.39 4%
Manufacurting and Other Expenses 17,269.62 71% 2,221.48 9%
Depreciation 671.36 3% 687.48 3%
Impairment -4.15 0% 0.00 0%
Other Expenses 0.00 0% 1,784.16 7%
Total Expenses 17,531.57 85% 21,611.96 85%
Profit Before Tax 2,264.56 11% 2,594.74 10%
Provision For Deferred Tax 87.90 0% -97.86 0%
Tax Adjustment For Earlier Years -113.17 -1% 0.00 0.00
Net Profit 1,915.63 9% 2,136.92 8%
Inference:
figure increasing year after year. In the year 2010 and 2011, cost of sales is 85% of the total
income. Administrative and other expenses are fluctuating. Even though the sales increased but
there is decrease in the net profit of the organization. The net profit slashed from 9% to 8% only.
The company must adopt correct pricing and control the unnecessary expenses to attain high
profits
TABLE 5.27

Particulars 2010-2011 % 2011-2012 %
Income
Less: Excise Duty 1,488.91 6% 1700.18 6%
68
Other Income 347.49 1% 615.79 2%

Total Income 24,206.70 95% 27,212.57 96%
Expenditure
Increase/Decrease in Stock -394.67 -2% -407.31 -1%
Cost of Raw Materials Consumed 15,530.94 61% 17843.08 63%
Employee Benefit Expenses 1,040.39 4% 1113.35 4%
Power and Fuel 2,221.48 9% 2,870.67 10%
Depreciation 687.48 3% 689.97 2%
Other Expenses 1,784.16 7% 1866.25 7%
Total Expenses 21,611.96 85% 24,475.62 86%
Profit Before Tax 2,594.74 10% 2736.95 10%
Provision For Deferred Tax -97.86 0% -62.93 0%
Net Profit For the year 2,136.92 8% 2,237.20 8%
Inference:
figure increased from Rs. 23,859.21 Crore to Rs. 26,596.78. In the year 2010-11 the total
expenses is 85%. There is heavy decrease in the other incomes. In the year 2011-12 income
increased from Rs. 2,136.92 crore to Rs. 2,237.20.
TABLE 5.28

Particulars 2011-2012 % 2012-2013 %
Revenue from Operations 28,296.96 100% 26,056.93 100%
net sales 26,596.78 94% 25,784.31 99%
Other oprating Revenues 615.79 2% 272.62 1%
Expenses 24181.99 85% 24,557.41 94%
69
Cost of Materials Consumed 17843.08 63% 17,136.51 66%

Purchases of Stock-in-Trade 205.98 1% 0.38 0%
Changes in Inventories of Finished Goods. Work-in-Progress

and Stock in Trade -407.31 -1% 127.94 0%
Employee Benefit Expenses 1113.35 4% 1,200.80 5%
Power and Fuel 2,870.67 10% 3,073.04 12%
Depreciation and Amortization 689.97 2% 704.20 3%
Other Expenses 1866.25 7% 2,314.54 9%
Profit from operations before other income and finance

costs 3,030.58 11% 1,499.52 6%
Other Income 0.00 0% 983.09 4%
Profit before finance costs 3,030.58 11% 2,482.61 10%
Finance Costs 293.63 1% 435.98 2%
Profit before Tax 2,736.95 10% 2,046.63 8%
Tax Expenses 499.75 2% 347.43 1%
Net Profit for the period 2,237.20 8% 1,699.20 7%
Inference:
figure slashed down very. It decreased from Rs. 26,596.78 Crore to Rs. 25,784.31 Crore. In the
year 2011-12 cost of sales is 85%. However in Administrative and other expenses there was a
negligible change. But in 2012-13 there is about 94% of revenue is the expenses.
TABLE 5.29
COMMON SIZE BALANCE SHEET (2008-09 & 2009-10)
Particulars 2008-09 % 2009-10 %
Sources of Funds
Shareholders funds
Share Capital 170.46 1% 191.37 1%
Employee Stock Options Outstanding 3.17 0% 3.99 0%
Reserves and Surplus 23,584.69 70% 27,715.61 78%
23,758.32 71% 27,910.97 78%
70
Loan Funds
Secured Loans 5,713.23 17% 5,153.90 14%
Unsecured Loans 2,611.06 8% 1,203.00 3%
8,324.29 25% 6,356.90 18%
Deferred Tax Liability (Net) 1,410.67 4% 1,366.44 4%
Total 33,493.28 100% 35,634.31 100%
Application of Funds
Fixed Assets
Gross Block 13,393.07 40% 13,793.35 39%
Less: Depreciation 5,241.65 16% 5,840.00 16%
Less: Impairment 264.45 1% 218.53 1%
Net Block 7,886.97 24% 7,734.82 22%
Capital Work-in-Progress 1,389.63 4% 3,702.79 10%
9,276.60 28% 11,437.61 32%
Investments 19,148.84 57% 21,840.83 61%
Current Assets, Loans and Advances
Inventories 4,070.14 12% 5,921.41 17%
Sundry Debtors 1,201.22 4% 1,311.87 4%
Cash and Bank Balances 843.72 3% 140.21 0%
Other Current Asset 51.78 0% 53.43 0%
Loans and Advances 1,573.05 5% 1,437.37 4%
7,739.91 23% 8,864.29 25%
Less:
Current Liabilities and Provisions
Current Liabilities 1,868.91 6% 5,426.93 15%
Provisions 803.16 2% 721.49 2%
2,672.07 8% 6,148.42 17%
Net Current Assets 5,067.84 15% 2,715.87 8%
Total 33,493.28 100% 35,634.31 100%
Inference:
The common size balance sheet for the year 2009 to 2010 is as follows: Share capital of the
company has increased from 170.46 to 191.37 . Secured loan for the company has decreasing trend.
It increases 5% to 4%. There is a slight difference in the case of inventories.
TABLE 5.30
2010-
Particulars 2009-2010 % Particulars 2011 %
EQUITY & EQUITY &
LIABILITIES LIABILITIES
Sources of Funds Shareholder’s funds
Shareholders’ funds share capital 191.46 0%
Share Capital 191.37 1% Reserve & surplus 28831.83 62%
71
Employee Stock Money received against

3.99 0
Options Outstanding 0% share warrants 0%
Reserves and Surplus 27,715.61 78% 29700.1 64%
Non-current
27,910.97
78% liabilities
Loan Funds long-term borrowings 5147.54 11%
Deferred tax liabilities
Secured Loans 5,153.90 1287.49
14% (net) 3%
Other long-term
Unsecured Loans 1,203.00 290.5
3% liabilities 1%
6,356.90 18% long-term provisions 268.07 1%
Deferred Tax
1,366.44 6993.6
Liability (Net) 4% 15%
Total 35,634.31 100% Current liabilities
Short-term borrowings 3890.35 8%
Application of
Trade payables 4082.95
Funds 9%
Fixed Assets Other current liabilities 1053.91 2%
Gross Block 13,793.35 39% Short-term provisions 815.43 2%
Less: Depreciation 5,840.00 16% 9842.64 21%
Less: Impairment 218.53 1% 46536.34 100%
Net Block 7,734.82 22% ASSETS
Capital Work-in- NON-CURRENT
3,702.79
Progress 10% ASSETS: Fixed Assets
11,437.61 32% Tangible Asset 7560.69 16%
Investments 21,840.83 61% Intangible Asset 23.69 0%
Current Assets,
Loans and 6030.32
Advances Capital work-in-progress 13%
Intangible assets under
Inventories 5,921.41 0.09
17% development 0%
Sundry Debtors 1,311.87 4% non-current investments 13049.66 28%
Cash and Bank Long-term loans &
140.21 3942.59
Balances 0% advances 8%
Other Current Asset 53.43 0% Other non-current assets 0.1 0%
Loans and Advances 1,437.37 4% 30607.14 66%
8,864.29 25% current assets
Less: Current investments 5197.09 11%
Current Liabilities
Inventories 7651.4
and Provisions 16%
Current Liabilities 5,426.93 15% trade receivables 1255.49 3%
Provisions 721.49 2% Cash & bank balances 233.39 1%
72
Short-term loans &

6,148.42 1344.75
17% advances 3%
Other current assets 247.08 1%
Net Current Assets 2,715.87 8% 15929.2 34%
Total 35,634.31 100% 46536.34 100%
Inference:
The common size balance sheet for the year 2010-2011 is as follows:
Share capital of the company is constant in two years. In 2002-2003 in 70.55% to 44.96%.Secured
loan for the company has decreasing trend. Fixed asset of the company is increasing in this year
from 32% to 66%. Current liability and provisions is increasing from 17% to 21 %.
TABLE 5.31
Particulars 2010-11 % 2011-12 %
EQUITY & LIABILITIES
Shareholder’s funds
share capital 191.46 0% 191.48 0%
Reserve & surplus 28831.83 62% 31299.68 56%
Money received against share warrants 0 0% 541.31 1%
29700.1 64% 32032.47 58%
Non-current liabilities
long-term borrowings 5147.54 11% 11115.13 20%
Deferred tax liabilities(net) 1287.49 3% 1224.56 2%
Other long-term liabilities 290.5 1% 953.1 2%
long-term provisions 268.07 1% 287.32 1%
6993.6 15% 13580.11 24%
Current liabilities
Short-term borrowings 3890.35 8% 3456.78 6%
Trade payables 4082.95 9% 4659.77 8%
Other current liabilities 1053.91 2% 998.61 2%
Short-term provisions 815.43 2% 919.88 2%
9842.64 21% 10035.04 18%
46536.34 100% 55647.62 100%
ASSETS
NON-CURRENT ASSETS: Fixed Assets
73
Tangible Asset 7560.69 16% 7125.95 13%

Intangible Asset 23.69 0% 24.25 0%
Capital work-in-progress 6030.32 13% 16256.7 29%
Intangible assets under development 0.09 0% 0.24 0%
non-current investments 13049.66 28% 13503.7 24%
Long-term loans & advances 3942.59 8% 2249.53 4%
Other non-current assets 0.1 0% 7.81 0%
30607.14 66% 39168.18 70%
current assets
Current investments 5197.09 11% 4583.4 8%
Inventories 7651.4 16% 7742.86 14%
trade receivables 1255.49 3% 1427.45 3%
Cash & bank balances 233.39 1% 722.3 1%
Short-term loans & advances 1344.75 3% 1647.65 3%
Other current assets 247.08 1% 355.78 1%
15929.2 34% 16479.44 30%
46536.34 100% 55647.62 100%
Inference:
The common size balance sheet for the year 2011 to 2012is as follows:
There is constant Share capital of the company in both years i.e. 191.46. Secured loan for the
company has increasing trend. It increases 11% to 20%. Unsecured loan of the company has been
paid off. Fixed Current Asset of the company is decreasing in this year of 34% to 30%. Current
liability and a provision is decreasing 21% to 18%.
TABLE 5.32
Particulars 2012 % 2013 %
EQUITY & LIABILITIES 32032.47 58% 33972.39 51%
long-term borrowings 11115.13 20% 20443.05 31%
Deferred tax liabilities(net) 1224.56 2% 1191.14 2%
Other long-term liabilities 953.1 2% 974.28 1%
long-term provisions 287.32 1% 300.94 0%
13580.11 24% 22909.41 34%
Current liabilities
Short-term borrowings 3456.78 6% 3701.72 6%
Trade payables 4659.77 8% 3051.52 5%
74
Other current liabilities 998.61 2% 1924.09 3%

Short-term provisions 919.88 2% 1059.43 2%
10035.04 18% 9736.76 15%
55647.62 100% 66618.56 100%
ASSETS
Non-Current Asset :Fixed Assets
Tangible Asset 7125.95 13% 7071 11%
Intangible Asset 24.25 0% 26.65 0%
Capital work-in-progress 16256.7 29% 23605.11 35%
Intangible assets under development 0.24 0% 0.01 0%
non-current investments 13503.7 24% 14050.17 21%
Long-term loans & advances 2249.53 4% 1681.08 3%
Other non-current assets 7.81 0% 34.51 0%
39168.18 70% 46468.53 70%
Current Assets
Current investments 4583.4 8% 6431.96 10%
Inventories 7742.86 14% 7702.61 12%
trade receivables 1427.45 3% 1515.04 2%
Cash & bank balances 722.3 1% 1497.82 2%
Short-term loans & advances 1647.65 3% 2272.42 3%
Other current assets 355.78 1% 730.18 1%
16479.44 30% 20150.03 30%
55647.62 100% 66618.56 100%
Inference:
The common size balance sheet for the year 2012 to 2013 is as follows:
Share capital figure remained constant however their %age to net worth has increased from 58 %
to 51%. Some amount of the secured loans has been paid off. Fixed asset of the company has been
remained constant to the total assets in the year 2012 and 2013. Current liability and a provision
decreasing 18% to 15%. It can be noticed that some amount of trade payables are paid.
TREND ANALYSIS
TABLE 5.33
75
STATEMENT SHOWING TREND PERCENTAGES OF WORKING

CAPITAL FOR THE PERIOD OF 2009 TO 2013
Trend percentages (base year 2008-09)
Particulars 2008- 2009- 2010- 2011- 2012-
09 10 11 12 13
Current Assets
Inventories 100% 145% 188% 190% 189%
trade receivables 100% 109% 105% 119% 126%
Cash & bank balances 100% 17% 28% 86% 178%
Short-term loans & advances 100% 91% 85% 105% 144%
Current investment and Other current assets 100% 103% 10514% 9539% 13832%
(A) C.A Total 100% 115% 206% 213% 260%
Current liabilities
Short-term borrowings, Trade Payables &
Other current liabilities 100% 290% 853% 488% 464%
Short-term provisions 100% 90% 102% 115% 132%
(B) C.L Total 100% 230% 368% 376% 364%
Working Capital (A-B) 100% 54% 120% 127% 205%
Inference:
The trend percentage of working capital for the years 2009- 2013
 Here the year 2008-2009 is taken as base year as 100%. In 2010 there is 46% reduction in
the working capital when compared to the lbase year. Because there is increased current
liabilities.
 In 2011-2012, the percentage of working capital is increased by 20% as compared to the
base year. And in case of upcoming two years there is also an increase in working capital.
This is because there is an increased current assets even though the current assets are
increasing in these years.
TABLE 5.34
STATEMENT SHOWING TREND PERCENTAGES FOR THE
PERIOD OF 2009 TO 2013
Particulars Trend percentages (base year 2008-09)
76
2009
-
2008
2010
-
2009
2011
-
2010
2012
-
2011
2013
-
2012
Sales 100% 107% 131% 146% 142%
Operating and other Incomes 100% 41% 55% 97% 197%
Total Incomes 100% 105% 128% 144% 143%
Expenses
Purchase of row materials and Cost
100% 64% 14201% 15967% 15160%
of Raw Materials Consumed
Changes in Inventories 100% -145% -76% -78% 25%
Manufacturing, Operating (Power
and Fuel) and Employee Benefits 100% 119% 22% 27% 29%
Expenses
Finance Cost 100% 83% 65% 87% 129%
Depreciation and Amortization 100% 104% 107% 107% 109%
Other Expenses 100% -446% 191845% 200672% 248875%
Total Expenses 100% 108% 134% 151% 155%
profit Before Tax 100% 84% 96% 102% 76%
(-)Current Tax 100% 55% 116% 118% 73%
(-)Deferred Tax 100% -487% 542% 348% 0%
Net Profit For the Year 100% 86% 96% 100% 76%
Inference:
The trend percentage of working capital for the years 2009- 2013
 Here the year 2008-2009 is taken as base year as 100%. In 2010 there is a reduction in net
profit, because the total expenses of the concern is increasing tremendously. In the year
2011 there is a reduction in net profit i.e., 96%, but it is more than the previous year.
 But in 2011-12 there is an equal profit trend, and the profit is trying to balance. But in the
last year there is a upward trend in net profit because of increased finance cost,
depreciation and cost of row materials.
 NET SALES TREND ANALYIS
TABLE 5.35
Sales Trend
77
Year Amount Trend Percent
2008- 09 18,052.97 100%
2009- 10 19,408.02 108%
2010- 11 23,859.21 132%
2011- 12 26,596.78 147%
2012- 13 25,784.31 143%
FIGURE 22
 INVENTORY TREND ANALYIS
TABLE 5.36
Inventory Trend Percentage
2008- 09 4,584.03 100%
2009- 10 4,995.78 109%
2010- 11 6,786.41 148%
2011- 12 7,697.13 168%
2012- 13 7,722.74 168%
FIGURE 23
78
 NET PROFIT TREND ANALYIS
TABLE 5.37
Net Profit
2008- 09 2230.27 100%
2009- 10 1915.63 86%
2010- 11 2136.92 96%
2011- 12 2237.2 100%
2012- 13 1699.2 76%
FIGURE 24
79
 CURRNENT ASSETS TREND ANALYIS
TABLE 5.38
Current Assets
2008- 09 7,739.91 100%
2009- 10 8,864.29 115%
2010- 11 15,929.20 206%
2011- 12 16,479.44 213%
2012- 13 20,150.03 260%
FIGURE 25
 CURRENT LIABILITIES TREND ANALYIS
80
TABLE 5.39
Current Liabilities
2008- 09 2672.07 100%
2009- 10 6148.42 230%
2010- 11 9842.64 368%
2011- 12 10035.04 376%
2012- 13 9736.76 364%
FIGURE 26
 WORKING CAPITAL TREND ANALYIS
TABLE 5.40
Working Capital
2008- 09 5067.84 100%
2009- 10 2715.93 54%
2010- 11 6086.56 120%
2011- 12 6444.4 127%
2012- 13 10413.27 205%
FIGURE 27
81
82
CHAPTER VI
SUMMARY OF FINDINGS, CONCLUSION AND
SUGGESTIONS
83
RECOMMENDATIONS
 Company should work on his debt- turnover ratio because it declined over the year which is
not good sign and the firm should divert efforts towards improving it. The ratio gives out a
negative impact over hindalco’s liquid asset.
 The position of creditor’s payment is also showing a down trend effect. Here it is clearly
showing a decline and its failure to pay off its creditors in a short period. The company
should work on it and try to increase his goodwill.
 Profit earning capacity of the firm in Relation to its sales has decreased. This reflects that
purchase, sales and management of the Firm is not sound. So they need to work on it and try
to improve it immediately.
 Quick ratio of company shows that the firm will have difficulty to pay off their current
liabilities so they need to maintain their quick ratio.
 HINDALCO should try to make payments to creditors more quickly, thereby increasing
their creditor turnover ratio. It will help them in further improving their goodwill among
creditors.
 HINDALCO should try to further improve the efficient utilization of all assets that it has.
84
CONCLUSIONS
 Hindalco’s liquidity ratio shows that liquidity of the firm has increased with time and is
good which shows that the company are using its resources effectively and in good manner
 Hindalco’s solvency ratio reflects that most of the assets of the firm are supported by equity
capital. The company has raised its debt financing in order to raise their expenditure on
Asset. They have maintained a good balance debt and equity.
 They will be able to attract lenders for investment purpose as their capacity to meet the
interest burden is good and has also increased considerably during the given period. Overall
profitability of company is also good and has increased highly over the period of two years.
 Inventory turnover ratio of HINDALCO has increased over time and it reflects that the
firm’s inventories are being used efficiently in the year 2012.This clearly signifies that they
are able to sell their inventories quickly
 The fixed assets turnover ratio of HINDALCO has improved over the period. This shows
that HINDALCO’s ability to generate adequate sales revenue in relation to the size of
investment made in fixed assets has increased during the period.
 Hindalco’s Profitability ratios indicates that profit earning capacity of the firm in Relation to
its sales has decreased and it also shows the inefficiency of their production as well as
pricing on other hand Return on capital employed of the firm has increased marginally.
85
BIBLIOGRAPHY
BOOKS REFERRED
 Kothari C R-,Research Methodology, Wishwa Prakashan Pvt Ltd , 2000, New
Delhi
 Maheswari S N,Financial Management, S. Chand publications,NewDelhi.
 Pandey I M, Financial Management, Vikas Publishing house, 2005, New Delhi
 Paresh Shah P, Financial Management,Biztantra Publishers,2007,New Delhi
MAGAZINE AND JOURNALS

 Annual Report of FY 2009-10, 2010-11 of Hindalco Industries Ltd.
 Aditya Kiran
 Hindalco Sandesh
 Induction Guide (Training Centre)
WEBSITES REFERRED
 www.hindalco.com
 www.investopedia.com
 www.adityabirlagroup.com
 www.moneycontrol.com
86
APPENDICES
CONSOLIDATED INCOME STATEMENT FOR THE PERIOD OF 2009 TO 2013
Particulars Years (Rs. in Crore)
2008-
2009-
2010-
2011-
2012-
2009
2010
2011
2012
2013
Sales 18220 19536 23859 26597 25784
Operating and other Incomes 636.7 259.9 347.5 615.8 1255.7
Total Incomes 18856.3 19796.1 24206.7 27212.6 27040.0
Expenses
Purchase of row materials and Cost of 113.0 72.0 16053.2 18049.1 17136.9
Raw Materials Consumed
Changes in Inventories 520.6 -755.3 -394.7 -407.3 127.9

Manufacturing, Operating (Power and 14550.2 17269.6 3261.9 3984.0 4273.8
Fuel) and Employee Benefits Expenses
Finance Cost 336.9 278.0 220.0 293.6 436.0

Depreciation and Amortization 644.3 671.4 687.5 690.0 704.2
Other Expenses 0.9 -4.2 1784.2 1866.3 2314.5
Total Expenses 16166.0 17531.6 21612.0 24475.6 24993.4
profit Before Tax 2690.3 2264.6 2594.7 2737.0 2046.6
(-)Current Tax 478.1 261.0 555.7 562.7 347.4
(-)Deferred Tax -18.1 87.9 -97.9 -62.9 0.0
Net Profit For the Year 2230.3 1915.6 2136.9 2237.2 1699.2
87
BALANCE SHEET FOR THE YEAR ENDED 2009 AND 2010

2009-2010 2008-2009
Sources of Funds
Share Capital 191.37 170.46

Employee Stock Options Outstanding 3.99 3.17
Reserves and Surplus 27,715.61 23,584.69
27,910.97 23,758.32
Loan Funds
Secured Loans 5,153.90 5,713.23
Unsecured Loans 1,203.00 2,611.06
6,356.90 8,324.29
Deferred Tax Liability (Net) 1,366.44 1,410.67
Total 35,634.31 33,493.28
Application of Funds
Fixed Assets
Gross Block 13,793.35 13,393.07
Less: Depreciation 5,840.00 5,241.65
Less: Impairment 218.53 264.45
Net Block 7,734.82 7,886.97
Capital Work-in-Progress 3,702.79 1,389.63
11,437.61 9,276.60
Investments 21,840.83 19,148.84
Current Assets, Loans and Advances
Inventories 5,921.41 4,070.14
Sundry Debtors 1,311.87 1,201.22
Cash and Bank Balances 140.21 843.72
Other Current Asset 53.43 51.78
Loans and Advances 1,437.37 1,573.05
8,864.29 7,739.91
Less:
Current Liabilities and Provisions
Current Liabilities 5,426.93 1,868.91
Provisions 721.49 803.16
6,148.42 2,672.07
Net Current Assets 2,715.87 5,067.84
Total 35,634.31 33,493.28
88

Particulars 2012 2011
EQUITY & LIABILITIES

Shareholder’s funds
share capital 191.48 191.46
Reserve & surplus 31299.68 28831.83
Money received against share warrants 541.31 0
32032.47 29700.1
long-term borrowings 11115.13 5147.54
Deferred tax liabilities(net) 1224.56 1287.49
Other long-term liabilities 953.1 290.5
long-term provisions 287.32 268.07
13580.11 6993.6
Current liabilities
Short-term borrowings 3456.78 3890.35
Trade payables 4659.77 4082.95
Other current liabilities 998.61 1053.91
Short-term provisions 919.88 815.43
10035.04 9842.64
55647.62 46536.34
ASSETS
NON-CURRENT ASSETS
Fixed Asset
Tangible Asset 7125.95 7560.69
Intangible Asset 24.25 23.69
Capital work-in-progress 16256.7 6030.32
Intangible assets under development 0.24 0.09
non-current investments 13503.7 13049.66
Long-trem loans & advances 2249.53 3942.59
Other non-current assets 7.81 0.1
39168.18 30607.14
current assets
Current investments 4583.4 5197.09
Inventories 7742.86 7651.4
trade receivables 1427.45 1255.49
Cash & bank balances 722.3 233.39
Short-term loans & advances 1647.65 1344.75
Other current assets 355.78 247.08
16479.44 15929.2
55647.62 46536.34
89

Particulars 2013 2012
EQUITY & LIABILITIES 33972.39 32032.47

long-term borrowings 20443.05 11115.13
Deferred tax liabilities(net) 1191.14 1224.56
Other long-term liabilities 974.28 953.1
long-term provisions 300.94 287.32
22909.41 13580.11
Current liabilities
Short-term borrowings 3701.72 3456.78
Trade payables 3051.52 4659.77
Other current liabilities 1924.09 998.61
Short-term provisions 1059.43 919.88
9736.76 10035.04
66618.56 55647.62
ASSETS
Non Current Asset
Fixed Asset
Tangible Asset 7071 7125.95
Intangible Asset 26.65 24.25
Capital work-in-progress 23605.11 16256.7
Intangible assets under development 0.01 0.24
non-current investments 14050.17 13503.7
Long-trem loans & advances 1681.08 2249.53
Other non-current assets 34.51 7.81

46468.53 39168.18
current assets
Current investments 6431.96 4583.4
inventories 7702.61 7742.86
trade receivables 1515.04 1427.45
Cash & bank balances 1497.82 722.3
Short-term loans & advances 2272.42 1647.65
Other current assets 730.18 355.78

20150.03 16479.44
66618.56 55647.62
90
91

Financial Performance of Hindalco

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Financial Performance of Hindalco

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“Financial Performance Analysis With Special Reference to

The Capital Structure of Hindalco Industries Limited”

1.2STATEMENT OF THE PROBLEM

1.3 OBJECTIVES OF THE STUDY

 The primary objective is to study the financial performance of the company.

1.4 SIGNIFICANCE OF THE STUDY

1.5 SCOPE OF THE STUDY

1.6 RESEARCH METHODOLOGY

1.7 REVIEW OF LITERATURE

CONCEPT OF FINANCIAL STATEMENTS

1.8 TOOLS OF FINANCIAL ANALYSIS

1.9 PERIOD OF THE STUDY

1.10 LIMITATIONS OF THE STUDY

The study suffers from the following limitations:-

MEANING AND DEFINITION OF BUSINESS FINACE

CHARACTERISTICS OF IDEAL FINANCIAL STATEMENTS

The ideal financial statements should have the following characteristics:

NATURE OF FINANCIAL STATEMENTS

IMPORTANCE OF FINANCIAL STATEMENTS

 Management: The management is able to exercise cost control through financial

LIMITATIONS OF FINANCIAL STATEMENTS

TOOLS OF FINANCIAL ANALYSIS

1) Comparative balance sheet statement

a) Comparative Balance Sheet

b) Comparative Income Statements

2) Common- Size Statements

a) Common –size balance sheet

b) Common size income statement

4) Cash Flow Statement

Cash flow statement is an analytical statement prepared by the management accountant to

NATURE OF RATIO ANALYSIS

Ratio analysis is a technique of analysis and interpretation of financial statement. I am the

ADVANTAGES OF RATIO ANALYSIS

 It assists in trend analysis:

 It helps in measuring firm’s operational efficiency:

DISADVANTAGES OF RATIO ANALYSIS

Current ratio = Current Assets / Current Liabilities

Quick ratio= Quick assets / Current Liabilities

Absolute Liquid Ratio

Absolute liquid ratio = Cash + Marketable securities / Current Liabilities

Debt-equity ratio = Debt/Equity or outsiders fund/share holder fund.

Proprietary Ratio Or Equity Ratio:

Proprietary ratio= shareholder’s Fund/Total Tangible asset

Fixed Asset To Net Worth Or Proprietors Fund Ratio:

Capital Gearing Ratio:

Inventory Turnover Ratio:

Inventory turnover ratio= cost of goods sold/ average inventory

 Inventory Conversion Period

It is calculated to know the number of days required to sell the stock.

Inventory Conversion Period = No of Days / Stock Turn over Ratio

 Debtors turnover ratio:

Debtors turnover ratio= Net credit sales/ Average accounts receivable

 Average Collection Period

Average Collection Period= Days in a Year/Debtors Turnover Ratio

 Working Capital Turnover Ratio:

Working capital turnover ratio= Net sales/ net working capital

 Fixed Asset Turnover Ratio:

Fixed asset turnover ratio= Net sales/ fixed assets

 Current Asset Turnover Ratio

Net Profit Ratio :

Net Profit Ratio = (Net profit / Net sales) × 100

Operating Margin Ratio = Operating Profit/ Net Sales x 100

Return On Net Capital Employed: